Where would you buy?? Believe ole Kelly will meet the street estimate for the second quarter using the reserves. I call it cooking the books. Are there any numbers being reported that would trigger a buy by you guys?? Appreciate your comments.
I am only going to buy the yield. Loan Loss reserves are a paper drill. Meaningless. Loan growth is not robust. Acquisitions would be nice, but other than Colonial (not a home run), I have not seen anything. Dividend increases will come, but not sure when and in what amount. I look at what my risk should be in owning this bank at its current yield agaisnt what i can get owning either an equivant maturity treasury or even gold. Right now I would certainly expect to get more than 2.5% for owning a stock that is still highly risky. I think you will see an $0.80 or better dividend going forward. (that will be the first incremental step back to $1.50, but that will take years). Given my expectaiton of the dividend, and assuming I want to lock in a yield at 4.5% or better for now, I would not pay over $18. Oddly, my investment criteria for owning the bank is similar to the way the bank views its own credit. It wants a lower price (ie. more collateral) and a higher yield. The bank cannot have that and perhaps neither can I....is it any wonder our entire eceonomy is in a state of limbo?
"Given my expectaiton of the dividend, and assuming I want to lock in a yield at 4.5% or better for now, I would not pay over $18."
Sell price for a january 2013 put is $1.12 per share at $17.50 strike. There's your trade. I've been doing it on both bbt and usb at these levels.
The math is simply - bbt normalized earnings are $4.50/5.00 share. Don't think you'll ever get the opportunity to go long bbt at $18 which is close to their current tbv.
Next week I think you and many other folks will be surprised that their delinquencies are quickly approaching a normalized level. Plus, their loss severity rates will start to approach zilch on 09,10,11 defaults so their losses will be very small.
Thank you nobank. Think you have it right. You do know that the old dividend (2008) was $1.88. Your forecast of $1.50 ain't no big deal. Thanks anyway. Let me know when you buy the banks. Thanks again.