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BB&T Corporation Message Board

  • matollionequay matollionequay Apr 13, 2011 7:57 AM Flag

    Norm, how would you relate these comments to BBT?

    "JPMorgan Chase & Co.'s profits included $2 billion from reducing its credit card loan reserves. The slump in real estate continued to weigh as the bank increased its provision for credit losses by $1.1 billion."

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    • I thought Morgan results were good even though loans continued to drop - down 1% sequentially.

      Charge-offs dropped by 27% and the reduction was across the board. The provision for bad loans dropped by about 2/3 to $1 billion plus driven by a 10% reduction in non-accrual loans and continued improvement in delinquencies.

      Last qtr. bbt charge-offs were $538 million. In their March 2011 presentation, the bank said that credit performance continues to show steady improvement so I expect a significant reduction in charge-offs. I would not be surprised to see charge-offs drop off to $400 million this quarter which would be in line with morgan. Note that bbt said that some of their tdrs would be cured this quarter which must come as a shock to Siegenthaler over at CS.

      The big fly in the ointment is the provision for bad loans. Morgan reduced their Allowance for Loan Losses by about $3 billion or 10% for the 1st qtr. Bbt has yet to reduced their ALL even though their credit performance has shown major improvement in recent qtrs. Many of the regional banks reduced their ALL in the 2nd half of 2010.

      It would be unimaginable for King not to significantly reduce the banks ALL given the improvement in the credit data.

      Bottom line is that Kelly King has considerably latitude in this area. One could argue that the provision should be negative this quarter. If charge-offs this quarter drop to say $400 million with major reductions expected over the balance of 2011 as the bad land loans are completely cleaned up, why does bbt need a $2.6 billion provision which would equate to several years of charge-offs. Bbt practices portfolio accounting and the ALL should be calculated accordingly and not be based on gain on sale accounting.

      I'm sticking with my eps projection of $.60.

      • 1 Reply to normlasky
      • Believe me, I'm cheering for you. Here's my simplistic take on JPM:

        Credit Cards got better. Real estate is still a problem requiring more write off.

        Based on the BBT naysayers over the last 2 years, BBT has not appropriately faced its problems. That would suggest at best no improvement in RE for BBT. Apparently, you think quite the opposite.

        What is the size of RE loans relative to CC loans for BBT?

        What day does BBT announce?

        As always, thanks.

 
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