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BB&T Corporation Message Board

  • normlasky normlasky Nov 25, 2010 6:52 PM Flag

    4th qtr. and 2011 Projections

    I've posted my projections over at investor village on the bbt message board. These are my best guesses and may be way off the mark. You should do you own due diligence when making your own investment decision and not rely on my projections. Feel free to critique my estimates. They are much different than the estimates made by Credit Suisse. I'm posting this information so we can exchange opinions. I'm sure there are many areas that I've overlooked - both favorable and unfavorable. For example, I did not factor into the projection the favorable mix shift from increased c&i loans. On the other hand I did not factor into the projection the full impact of financial regulatory reforms / fdic expenses.


    http://www.investorvillage.com/smbd.asp?mb=5226&mn=91&pt=msg&mid=9803195

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    • Norm knows what he is talking about. Be very cautious if you are shorting BB&T. It is the best financial in the country - bar none in my opinion.

    • Norm,

      I saw this back in the beginning of Dec. Thank you for sharing.

      Best regards,

      Al

    • Not personally, since I don't work for a bank.

      However, unlike some posters on this board, I don't fall in love with any bank's stock.

      You have to recognize that bank executives' primary concern is their own pay and benefits. They expand and acquire other banks because growth will increase their own pay, even if that growth makes their bank less profitable and reduces shareholder value.

      Shareholders are nothing more than an irritant to them - yellow jackets at their picnic - that they have to put up with at the annual meeting.

    • Norm,

      I would like that you make a similar forecast for PNC...

      I am long with BBT, PNC, BAC and MTB. My favorite bet is PNC.

      • 1 Reply to stratagest
      • "I would like that you make a similar forecast for PNC...:

        Sorry, I don't have the time. It would take me weeks to prepare a similar forecast for pnc.

        Pnc is a good bank. I think morgan stanley is forecasting eps of $6.40 for 2011. Think their price target is around $70. Much of the bang of a lower provision has already been factored into their recent earnings. I was long pnc when it was $51 but dumped it recently during the runup. I believe bbt is a better buy. The knock on pnc is stagnant demographics while the southeast will likely see 2% annual increase in population.

        I like their ownership position in blackrock which I think is worth around $8 share.

    • Norm's view on reserves, charge-offs, etc. is good work but always misses the mark...all these factors have already been priced into the stock. Unless BB&T is fudging the books, the smart money has already considered all this. Your comments regarding the economy, underemployment are more relevant to the discussion. That outlook is still dim. Nimble financial institutions willing to take on risk are the likely recipients of investor support, as no one is buying yield right now. Certainly we would all like more yield, yes, but look rather for growth and other substantial strategic initiatives that drive long-term returns. Hording cash in low cost depository relationships does "not a bank make" . Even if Norm's numbers come true, it is not as if BB&T will be alone in a changing loan loss picture. Again this will impact everyone. The key is "what are you going to do tomorrow, not how well you are cleaning up yesterday's mess."

    • Very Interesting. Good planning model but you are optimistic.

      I consider that :

      1) The provision for loans loses should be higher;

      2) S--t happen, so you must build in a contengency in your projections.

      2) BBT bonus increases for upper management will probably take as much of 30 % of the profit change. Dont forget, we are only the stupid shareholders.

      I will be happy if BBT deliver $ 2.50/s during FY2011.

      • 2 Replies to stratagest
      • "1) The provision for loans loses should be higher;"

        Net charge-offs for the 4th qtr. 2011 are projected at $268 million or about 110 bsp which is still double bbt normalized historic average. Based on this the 12/31/11 reserve for loan losses ($1.6 billion) equates to 6 quarters of charge-offs ($1.6 billion divided by $268 billion).

        6 qtrs of charge-offs is very conservative. Imo, it should only be 2 quarter of charge-offs What do you suggest? 2 years. Remember bbt practices portfolio accounting. Revenues and costs are supposed to be matched. You can't book all the inherent losses in the loan for held for investment unless you book all of the corresponding revenues over the life of the portfolio. Bbt does not practice gain-on-sale accounting. Can't have it both ways - portfolio accounting for revenue and gain-on-sale for charge-offs.

        How about backing up your comment with some logic .... other than saying it's too low. Why?

      • Excellent observation....your consideration aka factual.

 
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