My view of BB&T's results over the next few quarters is much more simplistic. I believe that Kelly King will use reserves to orchestrate results. BB&T will beat the street but no big earnings number for the next few quarters. Too much cash tied up in fed funds at very low return. For years John Welch used the financial arm of General Electric to keep GE earnings growing. King can now do the same with BB&t reserves. Just my opinion and I will buy more shares before October 20th if share price stays around this level. Good numbers norm. I appreciate your input.
"My view of BB&T's results over the next few quarters is much more simplistic. I believe that Kelly King will use reserves to orchestrate results. BB&T will beat the street but no big earnings number for the next few quarters."
With all due respect ayscuew, I do not believe you understand portfolio accounting. The vast majority of bbt charge-offs in the 3rd qtr will result from loans originated in 2005 through 2008. Bbt provisioning this qtr is primarily a function of loans originated in 2009 and subsequent periods. There is a world of difference in underwriting standards between the 2 time periods referenced above. The resulting bad debt expense for these 2 time periods will be vastly different.
So obviously, provisioning for the 3rd qtr. 2011 should be substantially less than charge-offs because credit quality has improved and will continue to improve with bbt bad debt expense normalizing at 60 bsp per year.
I'm sure your opinion will be shared by many folks in the media this qtr. Certainly nothing new. Bank ceos need to do a much better job of explaining portfolio accounting to the media. Ignorance creates fear and destroys value. Ok with me though because otherwise, I would not have been able to afford my current position in bbt and other high quality banks.
When it comes to loan provisioning, the key question is do the credit metrics - nonaccrual addition and changes in delinquencies - support the loan provision. For example, last qtr. bbt provisioning equaled 118 bsp, almost twice the bank's stated normalized level even though there was a huge improvement in credit metrics. Personally, I think it was too high. This qtr. I think the credit metrics will continue to show major improvement and loan provisioning will definitely fall a lot.