<PAGE>

                                                                    Exhibit 10.4

     June 5, 1998


     Mr. Edwin L. Ryder
     Senior Vice President - Finance and Administration
     Hooker Furniture Corporation
     Post Office Box 4708
     Martinsville, VA  24112

     Dear Larry:

          Branch Banking and Trust Company ("Bank") is pleased to increase its
     formal line of credit to the amount of $15,000,000 to accommodate the
     issuance of Letters of Credit on behalf of Hooker Furniture Corporation.
     Terms and conditions of this commitment are as follows:

     Borrower:    The Borrower shall be Hooker Furniture Corporation.
     --------

     Purpose:     The line of credit shall be used exclusively for the issuance
     -------
                  of Commercial Letters of Credit as required in normal
                  operations.

     Amount:      The maximum amount of this line of credit shall be Fifteen
     ------
                  Million Dollars ($15,000,000.00).

     Term:        This commitment shall be outstanding until March 31, 1999,
     -----
                  at which time it will expire and be subject to review. All
                  Letters of Credit issued under this line shall remain in force
                  until their respective dates of expiration.

     Advances/
     ---------
     Repayment:   Each Letter of Credit will be issued under a $15,000,000
     ---------
                  Promissory Note, which is enclosed for execution. Any advance
                  of funds by BB&T resulting from the issuance of Letters of
                  Credit shall be repayable upon demand. Please note that two
                  signatures are required according to the Certificate of
                  Corporate Resolutions we have on file. Any of the following
                  Corporate Officers may execute the Promissory Note: Chairman,
                  President, Sr. Vice President - Finance and Administration,
                  and Secretary.

     Interest
     --------
     Rate:        The promissory Note backing Letters of Credit issued under
     ----
                  this line shall bear interest at BB&T's Prime Rate adjusted
                  daily as prime changes.

     Collateral:  Unsecured.
     ----------

     Fees:        All fees shall be agreed upon by Hooker Furniture Corporation
     ----
                  and BB&T International Services Division.
     Financial
     ---------
     Reporting:   The borrower shall furnish to BB&T an audited Annual Report
     ---------
                  within 60 days of each fiscal year end and quarterly unaudited
                  financial statements within 45 days of each fiscal quarter
                  end.
<PAGE>

     Other:    The borrower must at all times maintain a financial condition
     -----
               satisfactory to BB&T, including no events of default with other
               lenders. Any such event of default, notice of which must be given
               to BB&T immediately, constitutes and event of default under this
               commitment.


               Larry, we sincerely appreciate your business and look forward to
     continuing our mutually beneficial relationship with Hooker Furniture. If
     the terms of our commitment described above are acceptable, please indicate
     by signing, dating, and returning the original of this letter to my
     attention before June 30, 1998.

               Thank you for your immediate attention to this matter. If you
     have any questions or concerns, please give me a call at 336-733-3259.

     Sincerely,

     /S/ Cory Boyte

     Cory Boyte
     Vice President



     Accepted this 11th day of June, 1998

     HOOKER FURNITURE CORPORATION

     By:  /S/ Edwin L. Ryder
          ---------------------------------
     Title: Sr. VP Finance & Administration
            -------------------------------


     Enclosure
<PAGE>

                                     BB&T
                                PROMISSORY NOTE

Borrower:    Hooker Furniture Corporation         Account Number:  499-0001192
Address:     Post Office Box 4708                 Note Number:  90003
             Martinsville, VA 24112               Date:  June 5, 1998


THE UNDERSIGNED REPRESENTS THAT THE LOAN EVIDENCED HEREBY IS BEING OBTAINED FOR
BUSINESS/COMMERCIAL OR AGRICULTURAL PURPOSES. For value received, the
undersigned, jointly and severally, if more than one, promises to pay to BRANCH
BANKING AND TRUST COMPANY, a North Carolina banking corporation (the "Bank"), or
order, at any of Bank's offices in the above referenced city (or such other
place or places that may be hereafter designated by Bank), the sum of Fifteen
Million Dollars and no/100th ($15,000,000.00), in immediately available coin or
currency of the United States of America.

Interest shall accrue from the date hereof on the unpaid principal balance
outstanding from time to time at the:
     .    Variable rate of the Bank's Prime Rate per annum to be adjusted daily
          as the Bank's Prime Rate changes.

Principal and interest is payable as follows:
     .    Principal plus accrued interest is due in full at maturity on demand.
     .    Prior to an event of default, Borrower may borrow, repay, and reborrow
          hereunder pursuant to the terms of the Commitment Letter, hereinafter
          defined.

     In addition, the undersigned promises to pay to Bank, or order, a late fee
in the amount of four percent (4%) of any installment past due for fifteen (15)
or more days. When any installment payment is past due for fifteen (15) or more
days, subsequent payments shall first be applied to the past due balance. All
interest shall be computed and charged for the actual number of days elapsed on
the basis of a year consisting of three hundred sixty (360) days. In the event
periodic accruals of interest shall exceed any periodic fixed payment amount
described above, the fixed payment amount shall be immediately increased, or
additional supplemental interest payments required on the same periodic basis as
specified above (increased fixed payments or supplemental payments to be
determined in the Bank's sole discretion), in such amounts and at such times as
shall be necessary to pay all accruals of interest for the period and all
accruals of unpaid interest from previous periods. Such adjustments to the fixed
payment amount or supplemental payments shall remain in effect for so long as
the interest accruals shall exceed the original fixed payment amount and shall
be further adjusted upward or downward to reflect changes in the variable
interest rate. In no event shall the fixed payment amount be reduced below the
original fixed payment amount specified above.

This note ("NOTE") is given by the undersigned in connection with the following
agreements (if any) between the undersigned and the Bank:

     .    Commitment Letter dated June 5, 1998 executed by Hooker Furniture
          Corporation.

     All of the terms, conditions and covenants of the above described
agreements (the "Agreements") are expressly made a part of this Note by
reference in the same manner and with the same effect as if set forth herein at
length and any holder of this Note is entitled to the benefits of and remedies
provided in the Agreements and any other agreements by and between the
undersigned and the Bank.

     In addition to collateral pledged pursuant to the terms of the Agreements
(if any) described above, the undersigned, as collateral security for the
indebtedness evidenced by this note, hereby grants the Bank a security interest
and lien in and to all deposit accounts, certificates of deposit, securities and
stocks now or hereafter in Bank's possession or on deposit with the Bank.

     If any stock or securities are pledged to Bank herein, the security
interest includes all stock splits, reissued shares, substituted shares, and all
proceeds thereof, which the undersigned promises to deliver to Bank.

BBT472 (9609)                    Page 1 of 3
<PAGE>

     No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or of any other right on any future occasion. Every
one of the undersigned and every endorser or guarantor of this note regardless
of the time, order or place of signing waives presentment, demand, protest and
notices of every kind and assents to any one or more extensions or postponements
of the time of payment or any other indulgences, to any substitutions, exchanges
or releases of collateral if at any time there be available to the holder
collateral for this note, and to the additions or releases of any other parties
or persons primarily or secondarily liable.

     The failure to pay any part of the principal or interest when due on this
Note or to fully perform any covenant, obligation or warranty on this or on any
other liability to the Bank by any one or more of the undersigned, by any
affiliate of the undersigned (as defined in 11 USC Section (101) (2)), or by any
guarantor or surety of this Note (said affiliate, guarantor, and surety are
herein called Obligor), or if any financial statement or other representation
made to the Bank by any of the undersigned or any Obligor shall be found to be
materially incorrect or incomplete, or in the event the default pursuant to any
of the Agreements or any other obligation of any of the undersigned or any
Obligor in favor of the Bank, or in the event the Bank demands that the
undersigned secure or provide additional security for its obligations under this
Note and security deemed adequate and sufficient by the Bank is not given when
demanded, or in the event one or more of the undersigned or any Obligor shall
die, terminate its existence, allow the appointment of a receiver for any part
of its property, make an assignment for the benefit of creditors, or where a
proceeding under bankruptcy or insolvency laws is initiated by or against any of
the undersigned or any Obligor, or in the event the Bank should otherwise deem
itself, its security interest, or any collateral unsafe or insecure; or should
the Bank in good faith believe that the prospect of payment or other performance
is impaired, or if there is an attachment, execution, or other judicial seizure
of all or any portion of the Borrower's or any Obligor's assets, including an
action or proceeding to seize any funds on deposit with the Bank, and such
seizure is not discharged within 20 days, or if final judgment for the payment
of money shall be rendered against the Borrower or any Obligor which is not
covered by insurance and shall remain undischarged for a period of 30 days
unless such judgment or execution thereon is effectively stayed, or the
termination of any guaranty agreement given in connection with this Note, then
any one of the same shall be a material default hereunder and this Note and
other debts due the Bank by any one or more of undersigned shall immediately
become due and payable without notice, at the option of the Bank. From and after
any event of default hereunder, interest shall accrue on the sum of the
principal balance and accrued interest then outstanding at the variable rate
equal to the Bank's Prime Rate plus 5% per annum ("Default Rate"), provided that
such rate shall not exceed at any time the highest rate of interest permitted by
the laws of the State of North Carolina; and further provided that such rate
shall apply after judgment. In the event of any default, the then remaining
unpaid principal amount and accrued but unpaid interest then outstanding shall
bear interest at the Default Rate called for hereunder until such principal and
interest have been paid in full. In addition, upon default, the Bank may pursue
its full legal remedies at law or equity, and the balance due hereunder may be
charged against any obligation of the Bank to any party including any Obligor.

Bank shall not be obligated to accept any check, money order, or other payment
instrument marked "payment in full" on any disputed amount due hereunder, and
Bank expressly reserves the right to reject all such payment instruments.
Borrower agrees that tender of its check or other payment instrument so marked
will not satisfy or discharge its obligation under this Note, disputed or
otherwise, even if such check or payment instrument is inadvertently processed
by Bank unless in fact such payment is in fact sufficient to pay the amount due
hereunder.

     The term "Prime Rate," if used herein, means the rate of interest per annum
announced by the Bank from time to time and adopted as its Prime Rate. The Prime
Rate is one of several rate indexes employed by the Bank when extending credit.
Any change in the interest rate resulting from a change in the Bank's Prime Rate
shall become effective as of the opening of business on the effective date of
the change. If this Note is placed with an attorney for collection, the
undersigned agrees to pay, in addition to principal and interest, all costs of
collection, including but not limited to reasonable attorneys' fees. All
obligations of the undersigned and of any Obligor shall bind his heirs,
executors, administrators, successors, and/or assigns. Use of the masculine
pronoun herein shall include the feminine and the neuter, and also the plural.
If more than one party shall execute this Note, the term "undersigned" as used
herein shall mean all the parties signing this Note and each of them, and all
such parties shall be jointly and severally obligated hereunder. Wherever
possible, each provision of this Note shall be interpreted in such a manner to
be effective and valid under applicable law, but if any provision of this Note
shall be prohibited by or invalid under such law, such provision shall be
ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Note. All of the undersigned hereby waive all exemptions and homestead laws. The
proceeds of the loan evidenced by this Note may be paid to any one or more of
the

BBT472 (9609)                     Page 2 of 3
<PAGE>

undersigned. From time to time the maturity date of this Note may be extended,
or this Note may be renewed in whole or in part, or a new note of different form
any be substituted for this Note, or the rate of interest may be modified, or
changes may be made in consideration of loan extensions, and the holder hereof,
from time to time may waive or surrender, either in whole or in part any rights,
guaranties, secured interest, or liens, given for the benefit of the holder in
connection with the payment and the securing the payment of this Note; but no
such occurrence shall in any manner affect, limit, modify, or otherwise impair
any rights, guaranties or security of the holder not specifically waived,
released, or surrendered in writing, nor shall the undersigned makers, or any
guarantor, endorser, or any person who is or might be liable hereon, either
primarily or contingently, be released from such event. The holder hereof, from
time to time, shall have the unlimited right to release any person who might be
liable hereon, and such release shall not affect or discharge the liability of
any other person who is or might be liable hereon. No waivers and modifications
shall be valid unless in writing and signed by the Bank. The Bank may, at its
option, charge any fees for the modification, renewal, extension, or amendment
of any of the terms of the Note permitted by N.C.G.S.(S)24-1 .1. In case of a
conflict between the terms of this Note and the Loan Agreement or Commitment
Letter issued in connection herewith, the priority of controlling terms shall be
first this Note, then the Loan Agreement, and then the Commitment Letter. This
Note shall be governed by and construed in accordance with the laws of North
Carolina; provided however that any Mortgage encumbering the Borrower's property
in South Carolina shall be governed by and construed in accordance with the laws
of South Carolina, and the Borrower hereby submits to the jurisdiction of South
Carolina in connection with any foreclosure or enforcement proceeding undertaken
in connection with the Borrower's property situated in South Carolina.

Sharing of Information with Affiliates. Applicable law permits us to share
information with third parties about our credit and account history with you.
Applicable law also permits us to share additional information about you and
your accounts with companies related to BB&T by common ownership or control
("affiliates"). We provide this additional information to our affiliates so that
you may receive special offers and promotions from our affiliates. You may
request that we not furnish this additional information (other than credit and
account history) to our affiliates by writing to Branch Banking and Trust
Company. Client Services Administration, P.O. Box 1847, Wilson, North Carolina
27684-1647. Please include your name, address, telephone number, account number
(if known), and social security (tax identification) number. Due to marketing
programs already in progress, please allow a reasonable period of time for your
request to take affect. In order for us to communicate important loan or deposit
account information, we will continue to notify you through occasional statement
inserts or other customer service mailings. Please be aware that state and
federal laws impose certain mandatory disclosures of customer information by
financial institutions. We must comply with laws that require mandatory
production or disclosure.

     IN WITNESS WHEREOF, the undersigned, on the day and year first written
above, has caused this note to be executed under seal.



                                             HOOKER FURNITURE CORPORATION
                                             ----------------------------

ATTEST: /S/ Robert G. Sherwood           By:  /S/ Edwin L. Ryder
        --------------------------            ---------------------------------
Title: Secretary                         Title: Sr. VP Finance & Administration
       ---------------------------              -------------------------------

                                         By:  A. Frank Hooker, Jr.
                                              ---------------------------------
        [Corporate Seal]
                                         Title: President
                                                -------------------------------



BBT472 (9609)                       Page 3 of 3