I found someting interesting in perusing the earnings transcript from BB&T's Q4 2008 Earnings (see link at bottom). BB&T's CEO Kelly King was discussing how the bank was essentially modeling that Unemployment would rise to 8 or 8.5% (maybe 9%) as a worst case. Here is his quote and read it closely because it is important -
"So, unemployment in the range of up to 8%, 8.5% is kind of a manageable account of unemployment rate, and part of it depends on where it occurs; you can't look at the national number, you have to look regionally. But I would say, you would need to see a significant, and significant to me, would be in that 9%, 10% plus range to have a dramatic impact on our scenarios at this time"
Well here we are, 3 months later, and unemployment is sitting at 8.5%. There is no economist in the world that is predicting that unemployment wont rise to 9% by this summer and many are projecting that it will exceed 10% by mid 2010.
So this begs the question...what will a "dramatic impact" on BB&T's loan loss scenarios entail. The CEO essentially stuck his foot in his mouth and said things will get ugly if unemployment goes up and so I expect a bad Q1 with even worse guidance.
Even more importantly, the CEO mentions that the regional unemployment is more important. Well if you look at the second article below, the unemployment in the most troublesome state of Florida has already hit 12.4% which has to cause even more issues.
Stay away from BB&T.
your wart (brain) just got burned off by 15.5% today along with your BBT stock
so far you brain can't calculate i made 13 points on the short while you piddle around making a few points at best
i originally covered at 18 and it still hasn't gone anywhere of real significance, but you are too dumb to figure that out
-->"The CEO essentially stuck his foot in his mouth and said things will get ugly if unemployment goes up and so I expect a bad Q1 with even worse guidance."
Good grief. Would you have preferred he not be honest with the shareholders? I, for one, appreciate his honesty.
"Sticking foot in mouth" is a disease many posters on this board seem to have as evidenced by their attempts at predicting the short-term movement of the stock.
He said: >>But I would say, you would need to see a significant, and significant to me, would be in that 9%, 10% plus range to have a dramatic impact on our scenarios at this time"<<
Do you understand the meaning of "at this time"? Do you understand what "10% plus" means? I read it CLOSELY - why didn't you?
Be assured this management will take necessary measures as the situation requires. This is old information and not worthy of more discussion.
Wow Boat -
I think I will enjoy this battle because you are obviously some old geezer who thinks they know a thing or two but in reality missed the BOAT long ago.
The CEO clearly said that Unemployment of 9 to 10% plus is not what they are expecting and that if it hits that point...it will have adverse effects on there business. So unemployment has gone from 7% to 8.5% from the last time they reported earnings. That means they have large write-offs in Q1 2008.
3 months from now unemployment will be close to 9.5%. You now hit a threshold that they have not even planned for and there writeoffs increase exponentially.
Not to mention the fact that they have $3B unperforming loans that they are praying they can recover there investment on. However they wont...because it will be 10 years from now before those asset prices recover.
If you argue with me you are going to get burned because your lack of intellect wont stand up to my ability to do something called read and think.