First qtr coming to a close. Analyst projections range from $.21 to $.48 per share. The average is $.31 per share, about the same as the 4th qtr. even though there has been a substantial improvement in credit quality.
Vs. the 4th qtr, here's how I stack up 1st qtr results:
1. I look for charge-offs to drop from $538 million (4th qtr) to $378 million (1st qtr) or down $160 million. I think the reduction will be driven primarily by significantly lower writeoffs on the bank's adc, other cre and lot loans.
2. As a result I look for the 1st qtr provision to drop to $278 million or $100 million less than 1st qtr. charge-offs and $265 million better than 4th qtr provision.
3. Net interest income should increase $25 million in the 1st qtr. vs. 4th qtr due to 2% higher loan balances.
4. The 4th qtr. was assisted by $99 million in security gains and it's unlikely that the bank will receive any significant benefit from this area in the 1st qtr. The 1st qtr is also the seasonal soft qtr for insurance. However imo, these 2 factors are more than offset by a sharp reduction in the ist qtr. valuation adjustment (4th qtr was about $110 million - year end oreos marked at 48% which ought to be enough after increasing from 30% to 48% marks over last couple of years), no ist qtr charges for 4th qtr. bonus accrual (my guess is around $25 million)and no 1st qtr, charges for 4th qtr. "kitchen sink" items booked in non-interest income (my guess is around $50 million).
30% of $.60 eps is $.18 cent dividend. Think Fed will approve bank dividend of $.20 per share in mid March. 30% of $.31 eps projected by analyst community is only a dime. Ha!!! Conflicts what Kelly King said in February and what Henson said yesterday. My money is on King.
LOL. I have been roundly criticized for being too analytical on this board, and now too intuitive. I HAVE analyzed BBT, and believe you are being way too optimistic about the rate of improvement. If you want me to show you my Excel models of BBT results, just send me your email address. The fact that I do not share your opinion is not the result of guesses, but of analysis (with the caveat that it is always possible it is wrong).
So sit back and enjoy the ride. I promise not to tell you that you are investing on a hope and a prayer, if you promise to do the same for me.
In about 45 days we will know which one of us is closer to being right.
norm, how does all this translate into eps forecast for Q1? Also, note that the 30% threshold for dividends is not a cap, but means that amounts above that will receive "additional scrutiny" from regulators. BBT has good credibility with regulators imo (unlike Wall Street analysts), and will probably be allowed to exceed the 30% by quite a bit. However, I believe the dividend will be limited to $.17 - .18.