Oct. 19 (Bloomberg) -- BB&T Corp., the North Carolina lender that acquired Colonial BancGroup Inc. in August, reported third-quarter profit dropped 58 percent as more real-estate borrowers stopped making payments.

Net income fell to $152 million, or 23 cents a share, from $358 million, or 65 cents, in the same period a year earlier, the Winston-Salem-based company said today in a statement. Profit was expected to be 25 cents a share, according to a Bloomberg survey of 29 analysts.

BB&T set aside $709 million to cushion bad debts in the quarter, up from $701 million in the previous quarter. The bank is seeing more late payments and loan charge-offs in its main North Carolina, South Carolina and Virginia markets after previously experiencing the most troubled loans in Georgia and Florida, said Jeff Davis, an analyst at FTN Equity Capital Markets who has a “sell” rating on the bank.

BB&T bought $22 billion in assets and $20 billion in deposits after the U.S. seized Colonial, leapfrogging Capital One Financial Corp. and SunTrust Banks Inc. to become the ninth- biggest U.S. bank. The lender raised $963 million in an August common-share offering and expects to cut 30 percent of costs at Montgomery, Alabama-based Colonial, the largest U.S. bank failure since Washington Mutual Inc. in September 2008.

“Our earnings continue to be negatively affected by a significant provision for credit losses and other costs related to the credit environment,” said Chief Executive Officer Kelly King. Early indicators of problem loans were largely stable, the bank said in the statement.

Assets Increase

Assets no longer collecting interest rose to $4.1 billion from $3.3 billion in the previous quarter. Debts BB&T doesn’t expect to be repaid declined to $446 million from $451 million in the previous quarter.

“BB&T was either lucky or smart that they didn’t go into Florida and Georgia in a big way before the housing crisis,” said Davis. “But now with Colonial they are there in a big way with the housing market bottoming out.”

BB&T has remained profitable through the recession, unlike regional rivals SunTrust Banks Inc. and Regions Financial Inc., and was told by regulators earlier this year it didn’t need to raise additional capital as part of the U.S. stress tests. Under an agreement with the Federal Deposit Insurance Corp., BB&T will have “no negative earnings impact” until at least $5 billion of losses on former Colonial loans are charged off, the bank said on Aug. 17.

BB&T declined $1.22, or 4.3 percent, to $27.03 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have fallen 1.6 percent this year compared with a 6.2 percent gain in the 24-company KBW Bank Index through Oct. 16. The company sold shares for $26 in a secondary offering in August.

To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

Last Updated: October 19, 2009 17:33 EDT