Don't mind ole numbie - he uses a lot of big words because he thinks it makes him sound intelligent. Little does he know that it is not the words you use, but the idea that is expressed that counts.
As I indicated to you I feel that BB&T will be adding to reserves to address any problems in this area (hence the lower earnings as revenues will probably rise). To hear numbie tell it every loan will default and the asset backing the loan will be worth $0. Big words do not hide the lack of intelligence of his thesis.
Ole numbie has been bashing BB&T every since I've been on the board. Now while I believe BB&T offers excellent value at these levels I did acknowledge the market may take it lower.
You have to believe that BB&T refused to give Numbie a loan, a CC, or some other perceived slight in the past and being a person with nothing better to do with his life has has spent months (years for all I know) here bashing the company because of this.
Given this you have to question the value of Numbie's opinion when it comes to investing in BB&T, because all indications are he has no financial stake in the company.
You're more than welcome. I can post my opinion as well, its pretty simple. this is a bad investment (maybe a good trade). You want to know what will make it go up? Sale. Major M&A deal. Or both. Want to see it go sideways for another decade, that will happen if Mgmt "stays the current course" (which hasn't done them any good anyway, I might add).
I was really hoping this thread wouldn't turn out to be a bashfest, thanks for ruining that nobankers. Inlet is simply stating his opinion based on his view of the world, the same thing you and I are doing.
Boater, you are just too stupid to get out of your own way. Commercial RE has always lagged residential. Every professional in this business knows that. We are just now starting to see the fallout. The CMBS market is now seeing the long awaited performance problems associated with underlying collateral. Banks are NOW facing the daunting task of deciding how to deal with covenant issues with commercial real estate borrowers. Six months ago it was residential housing. Now its the commercial side. You know nothing. The WSj had a good article abou this today, that commeical is now the "next shoe to drop," it aint over, son, and BB&T does not have any better solution on how to deal with it than anyone else. there are no alternate lenders out there to take out bad loans. Dont post unless you know something.
I do not agree with you on TARP being available for a transaction. Congress was grandstanding and have no intention of doing anything to restrict the use of TARP funds. If BB&T took over a bank that was husbanding cash because they feared a "bank run" they would be able to take those assets and deploy them as loans and that meets the requirements and intent of TARP money in unfreezing the financial system.
The dividend is normally announced about 1 month before the payment date (shortly after mid-Dec). A dividend cut could provide a pullback that would present an excellent chance to pick up shares on the cheap if it were to facilitate a takeover transaction. If the dividend is cut due to earnings deteriotation then it is a much worse event IMO.
Well, apparently congress is under the impression that the TARP funds are not to be used for an acquisition but rather exclusively to lend. I suppose it is possible for them to add legislation that enforces that requirement, in which case those 3.1 billion dollars wouldn't be available for an acquisition.
Point well taken about the insignificance of the divvy with your personal trading. But, I think, if the divvy is cut or dropped it would be tremendously bearish for the stock. From what I can tell, they usually announce 1st quarter divvy in mid-December, does that jive with what you know.
Personal I am neutral on what they do with the dividend. As long as we have market volatility where you can lose a year's worth in dividends in a couple of hours it is not a factor in deciding when and at what levels to buy.
They will cover the dividend out of earnings. The dividend will consume about 75% of earnings. At that level of coverage the board an management will have to consider if the current level of dividends is appropriate. I assume that will factor in earnings expectations for the coming year.
As to investing in other banks they should have ample capital to do so whether or not they pay the dividend. They have $3.1b from TARP funds, $350mm fron a sale of stock to the pension plan in June and about $700mm from selling preferred shares around August. That is around $4b available to make a buyout (or buyouts) of other banks.
Additionally BB&T was carrying over 9% of tier 1 capital (I believe they are required to have 6% tier 1 capital) - some of which could be used in the event they choose to make a large purchase of another institution. Also, in the case of a very large transaction one would assume they would raise additional capital (ala WFC).
Let's reverse the question. Why should BB&T go down? All this talk about commerical loan write offs is not new. We have heard it for at least two qtrs.
For the last three qtrs around the middle of the qtr when the naysayers knows there will be no news coming out from BB&T management they start these attacks. As usual it depresses the stock price. Now nothing is guaranteed in the market, but in about 1.5 months we get answers to these nay sayers. The pressures in the commeriacl markets have existed for many months now. BB&T has increased reserves to cover increased failures.
Overall though the LTV of commerical loans is in the 60-70% range so there is ample value backing these loans. You have to decide for yourself - do you believe these naysayers who have no access to internal corporate information or do you believe management which claims limited risk.
Right now there is a "bashing" of banks going on in the market. It does not discrimate between well run and poorly run banks. Do you believe BB&T is one of the well run banks? If you do then you have to believe that this sell down is temporary and there is a high probability the price will increase once facts become transparent.
Can it go lower? Sure it can if the market crashes another 10-15%. This though will provide you an opportunity to buy shares at even better prices. So do you want to take full positions now? My answer is no - I bought 1/4 of what I am willing to buy and now I wait. If I get lower prices then I will increase my stake at around $22.50 and $20 and lower.
All is JMHO of course. You have to decide for yourself what you wish to do.