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  • normlasky normlasky Jan 15, 2012 8:27 AM Flag

    Positive Barron's Feature Article, target of $36

    One of the big driver's of earnings increase not mentioned in the Barron's article is a sharp reduction in non-provisioning credit costs. In 2011, cost BBT about $1 billion pretax or about $1.10 per share after tax. Credit costs include the additional marks taken on oreos (primarily land), oreo maintenance expense, legal fees, real estate fees, personnel costs etc. I think in 2012 the bulk of these expenses will go away. I'm sure Kelly King and Clark Starnes will talk about this in detail this Thursday. My guess is that the reduction in credit costs will increase eps by about $.90 share in 2012. The provision for bad loans will also drop and is probably worth about $.25 per share in 2012.

    Add the benefits of an improved economy - loan growth, improved insurance biz, capital markets, wealth management and I think Kelly King has a good chance of achieving his projection of 15% roa on book value - $25 share including intangibles.

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    • The reason not mentioned in Barron's article because it is not important...four year old news. All baked into the share price already

    • Wow. Maybe you should be working for Barron's !!!

      Thanks for the analysis. So what do you think EPS will be for Q1 and 2012 as a whole??

      • 1 Reply to tony.molteni
      • The info contained in my message is simply data which comes directly from Kelly King's recent presentation. It is nothing new. Bbt got absolutely clobbered on their non-provisioning credit costs in 2011. Their adc portfolio (major driver of their non-provisioning credit costs) will be down around 80% from its peak and 2012 provisioning and credit costs will be minimal. This is a key difference between bbt and other major regionals but imo has been larrgely overlooked in share pricing in 2011.

        No idea why Barrons, S&P, Credit Suisse and the rest of the street has overlooked the obvious but it gave investors ample time to load up on bbt in the low 20's. Now it's time for the payoff.

        How much will bbt earn in 2012? What's 15% of $25, their book value per share?

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