I was just looking at the Wachovia announcement (Q1 loss $400 mil, dividend whacked after CEO said it was safe, $7B outside capital infusion/dilution, loan loss reserves quadruple) and wondering whether BBT might be facing similar problems.
It's tough to tell from a brief press release, but most of WB's probs seems to be in housing in FL and CA, and with "option adjustable rate mortgages" that came from Golden West. (Option ARMs apparently meant that you could skip housing payments whenever you wanted, and the balance would just be added to the loan. Great idea, eh? I bet all of those were listed as "current.") I don't think BBT has any of that crap, or much exposure in CA or FL. Interesting to note, though, that WB reported increased auto and CC delinquencies in those markets too.
My conclusion: at BBT divvy is safe, Q1 profits will be in line with estimates, or maybe miss a few pennies because they have to increase their loan reserves somewhat. Higher consumer delinquencies are coming, but don't think you'll be seeing any stories about losing $400 million and getting billions in outside capital to meet the Fed capital requirements....IMHO
Forget wb. Both rf and usb reported this am. Earnings for rf were $.55 vs. projection of $.48. Ubs earnings were $.62, 1 cent better than projection.
Bbt earnings for the 1st qtr should be fine. Better managed bank than rf with significantly lower non-performing loans and better loan loss mitigation history. Rf is a good comparison for bbt. Suntrust earnings may stink because they were grossly underprovided 12/31/07.
When will some definitive statement come from BBT about whether the coming dividend will be cut, stay the same, or be raised? I already own BBT, but I'm torn now between jumping in and buying more or hanging back cautiously. If the dividend is cut - not only do I lose my nice cushy dividend, but the price plummets as well....like Wachovia!
Has the dividend ever been cut? The yield yas fluctuated over time, but in the last 20 years I don't think the dividend has ever been cut. That includes numerous dips and recessions, so I see no reason to expect BBT's dividend to be unsafe.
Don't think you'll get dividend information until earnings are announced Thursday (17th). Mr Allison did say in January (when 2007 earnings were announced) that they expected to raise the dividend AGAIN in 2008. A lot has happened since then however (look at Wachovia). I still believe that the dividend will be raised again with the August paynebt.
Just think, a few months back there was a lot of posts about BBT and WB merging or one being bought by the other. Thank goodness top management did not follow suggestions from this board, we could be in great big doo-doo.
Hey billie check this out, these are companies numbie thinks we should be like:
Stocks Ease Ahead of Earnings Flood04/14/08 - 04:07 PM EDT
BBY BRK.A C (Action Alerts PLUS PICK) CC INTC JPM WB
Updated from 3:53 p.m. EDT
Stocks in New York saw jittery action Monday before closing slightly lower as traders digested an unexpected first-quarter loss at Wachovia (WB - Cramer's Take - Stockpickr) and other sobering glimpses into the rest of earnings season, which kicks into high gear this week.
After flirting with both sides of the flat line, the Dow Jones Industrial Average declined again as its financial components came under heavier selling pressure. Citigroup (C - Cramer's Take - Stockpickr), Bank of America (BAC - Cramer's Take - Stockpickr) and JPMorgan Chase (JPM - Cramer's Take - Stockpickr) all fell 2.4% or more.
Citi and JPMorgan are due to release numbers later this week and, altogether, roughly one-third of the Dow is scheduled to disclose first-quarter numbers by Friday. BofA should report next week.
The Dow gave back 23 points, or 0.2%, to 12,302, and the S&P 500 lost 5 points, or 0.3%, at 1328. The Nasdaq Composite shed 14 points, or 0.6%, to 2276.
"People are being a little bit cautious going into the earnings season," said Robert Pavlik, chief investment officer with Oaktree Asset Management. He noted that investor wariness has intensified since Friday, when General Electric (GE - Cramer's Take - Stockpickr) reported a rare earnings miss.
The news, together with miserable consumer-confidence numbers, yanked the Dow down more than 250 points.
"People are still getting over the GE miss," said Ryan Detrick, senior technical strategist with Schaeffer's Investment Research. "As far as earnings go, we've had a very bad first inning, so to speak. But it is early to declare the endgame, so people just want to be cautious before they see more results."
As for Wachovia, the bank said it swung to a shortfall of $270 million, excluding items, or 14 cents a share -- a far cry from the 40-cent profit that analysts had projected. In the wake of that, the bank is slashing its dividend, and it launched offerings for common and preferred stock worth $7 billion. The offerings are expected to raise net proceeds of $3.4 billion apiece, excluding any extra sales by underwriters in the case of strong demand.
Over the weekend, The Wall Street Journal had reported that the bank would get a cash injection from an investor group.
Wachovia shares were sliding 10.1%, and the NYSE Financial Sector Index tumbled 1.5%.
In more woeful signs of things to come, London's Sunday Times reported that Citigroup (C - Cramer's Take - Stockpickr) and Merrill Lynch (MER - Cramer's Take - Stockpickr) will likely take writedowns of $10 million and $5 billion, respectively, when they report later this week. The paper, which cited unnamed analysts, said that some believe Citi could write down as much as $12 billion.