BB&T to Pad Its Energy-Loan Reserves

Add BB&T to the list of banks bolstering reserves because of growing concerns about energy exposure.

The $210 billion-asset company expects to add $30 million to $40 million to its loan-loss allowance to account for riskier energy credits, it said in a regulatory filing Tuesday. BB&T will increase its energy-specific loan-loss reserve to as much as 8% from 5% at Dec. 31, according to the filing.

Several other banks, including JPMorgan Chase, Wells Fargo and Comerica, have recently said they would increase loan-loss reserves as oil prices remain depressed.

Energy loans make up about $1.4 billion, or 1%, of total loans at Winston-Salem, N.C.-based BB&T.

Its nonperforming assets are expected to “increase slightly” this quarter, the filing said; the company had previously forecast they would remain steady compared with the fourth quarter.

BB&T plans to offset the boost to reserves with securities gains.

Meanwhile, the filing warned that lending will be flat in the first quarter because of slower commercial loan growth. Management had previously predicted 1% loan growth compared with the fourth quarter.

Fee income, too, will be "relatively flat" compared with the fourth quarter, reflecting lower mortgage fees and service charges on deposits, the filing said.

Kelly King, BB&T’s chairman and chief executive, said during an interview last month that many energy lenders were underestimating their energy exposure.

Energy issues "cause us to be much more careful when it comes to determining the quality of the assets," King said when asked about his appetite for buying banks in Texas and Louisiana.

"We can get through [energy issues] if we have a partner that is seriously interested in having a positive discussion," King added. "The key is that they have to be really realistic about the risk in their loan portfolio. Right now … everybody thinks that their portfolio is better than what it may be."