BB&T Corporation BBT has been witnessing growth in loans and deposits. Also, rising rates have led to an increase in revenues. Strategic acquisitions have consistently been helping the company expand its footprint and fuel profitability. However, escalating costs owing to acquisitions and subsequent integrations are expected to curb BB&T’s bottom-line growth. Also, the company’s exposure to risky loans continues to be a near-term concern.

BB&T’s overall organic growth strategy remains impressive with continued rise in loans and non-interest bearing deposits. Over the last five years (2012-2016), loans and leases have witnessed a CAGR of 5.2%, while non-interest bearing deposits have seen a 3-year (2014-2016) CAGR of 14.3%. Both witnessed a rising trend in the first six months of 2017.

The company acquired National Penn and Swett and Crawford in 2016, which continue to be accretive to its earnings. While it plans to expand its footprint further in Texas and Pennsylvania through acquisitions, its key focus is to increase revenues from insurance operations from the current 15% to 20% of total revenues over time. For this, the company intends to acquire more insurance agencies. Such strategic initiatives should support bottom-line growth.

Driven by such initiatives, analysts are optimistic about the earnings prospects of the company. The Zacks Consensus Estimate for 2017 has increased nearly 1% over the last 30 days.

On the flip side, mounting operating expenses have been curbing BB&T’s bottom-line growth. Total operating expenses have been showing a persistent rise with a five-year (2012-2016) CAGR of 3.6%, largely attributable to acquisitions and subsequent integrations.

The company holds a large amount of risky loans that could pose a problem in case of further deterioration in macroeconomic conditions because of its exposure to commercial, direct retail lending and residential mortgage loan portfolios which were more than 77% of total loans and leases.

Also, this Zacks Rank #3 (Hold) stock has gained 22.1% in the past 12 months, compared with 40.1% rise for the industry.

Stocks to Consider

Stocks in the finance industry worth considering include State Street Corp. STT, The PNC Financial Services Group, Inc. PNC and M&T Bank Corp. MTB.

State Street Corporation has witnessed nearly 1% upward revision in earnings estimates for the current year, in the last 60 days. It currently carries a Zacks Rank of #2 (Buy). The company’s share price increased 37.8% in the past 12 months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PNC Financial Services has witnessed an upward earnings estimate revision of 0.6% for the current year, in the last 60 days. It currently carries a Zacks Rank of #2. The company’s share price increased 52% in the past 12 months.

M&T Bank Corp. has witnessed upward earnings estimate revision by three cents for the current year, in the last 60 days. The share price of the Zacks Rank of #2 company increased 34.7% in the past 12 months.

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