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On Mar 14, 2013, we reiterated our long-term recommendation on BB&T Corporation (BBT - Analyst Report) at Neutral. This reflects BB&T’s fourth quarter earnings, which were marginally ahead of the Zacks Consensus Estimate.

Why Neutral?

BB&T’s fourth quarter 2012 earnings came in at 71 cents, surpassing the Zacks Consensus Estimate by a penny. Better-than-expected results were primarily driven by growth in top line and reduced operating expenses, partially offset by slightly higher provision for credit losses. Also, improved credit quality as well as stable capital ratios were impressive.

Following the fourth-quarter results, the Zacks Consensus Estimate for 2013 has inched up 0.3% to $2.94 per share over the last 60 days. Yet, the Zacks Consensus Estimate for 2014 has remained stable at $3.14 per share in the same time frame. Hence, BB&T currently has a Zacks Rank #3 (Hold).

BB&T remains focused on its organic growth strategy, which is evident from its increase in client deposits and net interest income. Further, BB&T is focused on its inorganic growth strategy, thereby expanding its revenue streams and its market share by acquisitions in both 2011 and 2012. The company intends to pursue more acquisitions to enhance its banking network and improve top line.

Despite improvements being witnessed in credit metrics in 2012, credit quality still remains a cause of concern. Moreover, a sluggish economic recovery along with wide exposure to problem assets and various regulatory issues might pose a problem for BB&T to considerably improve its financials going forward.

Other Major Banks to Consider

While we prefer BB&T, other major banks worth a look include BankUnited, Inc. (BKU - Analyst Report), Comerica Incorporated (CMA - Analyst Report) and State Street Corporation (STT - Analyst Report). All these carry a Zacks Rank #2 (Buy).

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