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Boring Bank, Big Profits

By Tim Beyers
January 14, 2005

Yeah, I know. You want to be a Rule Breaker. You want to unearth Hidden Gems. You want to be the life of the party, and you bring this same quest for fun to your portfolio. While the Rule Breaker in me applauds your sauciness, the scrooge in me longs for the sweet comfort of the old, tired, and boring.

That's why I'm thrilled by BB&T's (NYSE: BBT) earnings report. The North Carolina-based regional bank said that its fourth-quarter net profits rose by 37% to $416.9 million, or $0.75 per share. Roughly $72 million in merger-related costs aided the year-over-year earnings gain. Still, excluding that total, BB&T's operating profit rose by a healthy 8.7% from 2003's fourth quarter.

I first argued in favor of BB&T here and this morning's results do nothing to diminish my enthusiasm. Among the firm's list of quarterly accomplishments: Total assets rose 11% to more than $100 billion for the first time in the BB&T's history. Fee income also rose 17% to $548.2 million. Profits from lending were up 4%, and this despite the firm upping its reserve for bad loans by 12%, to $65.2 million.

Most attractive about BB&T is that it has a record of consistency you'd expect from a large financial services firm such as American Express (NYSE: AXP), Citigroup (NYSE: C), JPMorganChase (NYSE: JPM), or Wells Fargo (NYSE: WFC). Similarly, it has a dividend any income investor would love at 3.52%. It has also raised its payout for 33 consecutive years. With this morning's results, I'd say 34 is a pretty safe bet.

Is BB&T sexy? No. The life of the party? Most definitely not. Boring? Absolutely. But like the rest of Wall Street's wallflowers, it may also be a budding beauty.

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Fool contributor Tim Beyers leads a relatively boring life with his wife and kids, and he wouldn't trade it for anything. Tim doesn't own shares in any of the companies mentioned in the story. To find out which stocks he owns, check his Fool profile, which is here. The Motley Fool has a disclosure policy.