My forecast has been revised as follows: (percent variance to Q1 2010) Interest income....$1,753 down 1.5% Interest expense......416 down 10.5% Loan loss provision...550 flat Net interest income...787
Non interest income...865, up 2.5%
Non interest exp....1,310 down 2.3%
Income from ops.......342 up 42%
After taxes...........276 up 47%
EPS...................$0.39 up 45%
Comments: Interest income for loans is up 10% in my forecast, offset by a large drop in income from securities, which is the result of the balance sheet repositioning completed in Q4.
The lower cost of deposits is a result of the mix change to low and non interest accounts that occurred throughout 2010.
Non interest income if due to flat insurance, reduced service charges (regulations), reduced mortgage banking fees due to the housing slow down, and all other sources up strongly in line with recent quarters.
Non interest expenses reflect a 3% increase in personnel expenses, foreclosed property expenses of $50 million (about the same as last year), valuation change of $25 million, down 80%, and continuing high regulatory charges.
Income taxes are based on 12% for the first $250 million pretax income, and 30% thereafter, for a blended rate of 17%.
OUTSTANDING RESULTS IF I AM RIGHT, ALTHOUGH NOT AS BULLISH AS NORMLASKY'S FORECAST.
By the way, thanks Norm for all your input. It helped clarify my thinking. Ciao, and good luck to all investors, even the dreaded shorts (lol)
I don't understand your logic for keeping the 1st qtr 2011 loan loss provision at $550 million given the much improved credit metrics. Both Henson and Bible said in March 1 2011 presentations that credit metrics are expected to show "steady" improvement in 2011.
Net chargeoffs for the 4th qtr 2010 were $538 million and they're certainly going to be better in the 1st qtr 2011. Bbt will not be building their ALL in the 1st qtr 2011 - they'll be reducing it.
We'll probably find out the relative magnitude of bbt 1st qtr 2011 earning on March 20/21 2011 when the Fed announces approved bank dividend increases.
Kelly King has already told us that bbt has requested approval of an increase from the Fed. and that the bank deserves to be one of the first banks to receive approval.
The payout ratio per your forecast is close to 50%. Imo, that's not in the cards.
Thanks for pointing out the $20 million double count of foreclosure expense in my 4th qtr. 2011 forecast. All right to be picky.
I know this is picky, Norm, but thought you would want to know. When I loaded your forecast into my spreadsheet to compare them, I found that you have a $20 million math error in Q4, 2011 in the non interest expenses. The total is $20 million higher than the detail. Not a criticism, just a fyi.