BB&T Corp. cautioned that it could experience "elevated charge-offs" in the third quarter as it gets more aggressive in disposing of bad loans.
The company is the nation's 12th largest servicer of residential loans and has commercial mortgage exposure as well.
Kelly King, the Winston-Salem, N.C., company's chairman and chief executive, told attendees at a conference in New York hosted by Barclays Capital that it is moving $1 billion in nonperforming loans to held-for-sale status. He said the $155.1 billion-asset BB&T would write down loans as they are moved, which could lead to higher charge-offs.
Overall, King assured that the increase would only be tied to the transferred loans and that he did not expect a "material change" in charge-off levels in future quarters.
In the second quarter, charge-offs rose 31.8% from the first quarter and 42.2% from a year earlier, to $671 million. (BB&T also had $29 million in recoveries in the second quarter.)
King said the nonperforming loans would be sold over the next two or three quarters.