UPDATE 1-BB&T earnings fall as bad loans grow

* Net income available to common shareholders 20 cents/shr

* Company recorded a $701 mln provision for credit losses

NEW YORK, July 17 (Reuters) - BB&T Corp (BBT.N) said on Friday that second-quarter earnings fell as credit losses increased and the Southeast regional bank set aside more money to cover bad loans.

Net income available to common shareholders fell to $121 million, or 20 cents per share, from $428 million, or 78 cents per share, a year earlier.

BB&T said quarterly results were reduced by a special assessment of 7 cents per share from the Federal Deposit Insurance Corp and a charge of 8 cents for the accelerated amortization on the preferred stock repaid to U.S. Treasury.

Last month, BB&T repaid the U.S. government the $3.1 billion it received under the Troubled Asset Relief Program after regulators determined the bank was well capitalized.

The company said those costs were partially offset by gains on sales of securities and extinguishment of debt, which increased earnings per share by 6 cents.

BB&T also recorded a $701 million provision for credit losses in the second quarter as bad loans mounted.

BB&T ended June with $152.4 billion of assets. It operates 1,505 branches in 11 states and Washington, D.C. (Reporting by Juan Lagorio; editing by Lisa Von Ahn)