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Suggest you read their 1/19 presentation found on their investor relations website. Also, read their transcript of earnings called.
Imo, bbt is selling at about 7 .5 times next year earnings.
Eps included about $.10 of eps charges - itemized in their presentation. Excluding these charges, eps for the quarter would have been $.71. Also note that their credit costs are still bloated - about $.20 eps reduction for quarter. First, their provision was 110 bsp almost equal to their net charge-offs excluding adc. I think their provision will drop to 70 bsp by year end. Their delinquencies - 30/89 days and 90 day plus drop 22%. Record low levels. (Don't know how you reconcile increased provisioning vs. record low delinquencies). Second, their foreclosed property cost still amounted to $93 million. Should drop to minimal amount by year end.
Loans and deposits were very good. Bbt continues to increase their market share. One negative is their nim - will continue to drop - probably down to 3.7% by year end due to accretion runoff. However, their loan growth will offset this and once the Fed increases rates, bbt nim will expand. Also, note that some of the nim reduction is also offset by reduced fdic expense.
Based on the content of the dialogue on this board, I have limited my participation. Bbt investor relations provides excellent presentation on their website. They are updated on a regular basis so if you're seeking info, suggest you check it out.
Thanks Norm, appreciate the comments. There is one person, a former member of the senior management team that had the respect and admiration of every employee I knew (I was an employee for 30+ years). Henry Williamson was a brilliant banker and a great leader. Henry, those of us who knew you and were priviledged to work with and for you have really missed you. It would be great if we could hear from you on this board as no one has ever commanded the respect and complete credibility that you did. Your opinions would be very welcomed!
"Imo, bbt is selling at about 7.5 times next year earnings. "
That's ~4$+ EPS and implies ~1.50% ROA. Ain't going to happen for 2013.
I can get to ~$3 EPS 2013 which is a v. generous 1.2% ROA for this bank. I think in the last 20 years it did 1.2% ROA 1,2 or 3 years from memory. BBT overpay for acquisitions. Colonial was a good one Crump just under ~2x revenue ...not so good in terms of price paid.
"Don't know how you reconcile increased provisioning vs. record low delinquencies"
Provisioning isn't coming down as fast as you would like as the NPLs are still missmarked imo - They took the Corrective mark on the OREO Q4 but the NPLs/TRDs still have work to do.
As King is now actively working to limit OREO Inflow all the chargeoff work has to be done at the front end(provisioning/chargeoff) vs bakend (foreclosure expense).
Just by the fact they they grow the average loan balances 1.5-2%/Q the provision gets to their 60-80bp target.
The oreo balance at 3/31 of $378 million are marked at around 72% which approximates 15% of the original appraisal That certainly can't be optimistic.
Their adc loan balance is $1.8 billion - reserve is around $400 million.
Maybe there is an addition $600 million of bad adc stuff leaving $1.2 billion of good loans. The adc balance peaked at $9 billion.
Their net chargeoff this quarter excluding adc approximated their provisioning at 110 bsp even though delinquencies dropped 22% on link quarter and are at a record low. Charge-offs are already close to normalized levels on c&i loans 66 bsp on $36 billion, sales finance 21 bsp on $8 billion, residential real estate 78 bsp on $21 billion. That's almost 2/3 of their loan portfolio. The big chargeoff problem areas adc, cre and direct retail will dry up by the 4th quarter.
So excluding the dime of one time charges in the quarter, the bank earned $.71 assuming tax rate of 25%. As I said credit costs for the qtr. were still elevated by an estimated $.20 giving them $.91 in a normalized scenario. Not too far from the $1 eps estimate per quarter
Imo, the reason for the $285 million provision is obvious.
[NORM] "Also, note that some of the nim reduction is also offset by reduced fdic expense."
Norm, what's reducing the FDIC expense? Based on the little reading I've done, I was under the impression the FDIC insurance rates were going up. That, along with building deposits, I would have expected their expense to go up.
Norm, it is not what they say but what they don't say that is equally important. Did you hear them say they were capturing share in all their markets? That is not true. Loan growth for competing small banks is off the charts...larger super regionals like BB&T, Key, US Bank, PNC are simply not making loans at the same pace, and even one of these jackleg CEOs was on MSNBC confirming that small community banks are taking huge chunks of loan growth and share from all the incumbent larger banks, namely because the smaller community banks were making the loans that the larger banks "don't have to make," because "we don't have to," And why don't they have to? because these larger banks, like BB&T are sitting on billions in cash that was sourced originally thru Fed and Treasury giveaways. The NIM number will not automatically improve if the Fed raises the short end of the curve. Any rise in interest rates will crush any fragile recovery. NIM may go up, but loan growth will go negative and the entire economy will slip backward.
" Loan growth for competing small banks is off the charts"
Why don't you back up your posts with data?
The federal reserve publishes weekly loan and deposit data for big banks and small banks. Big bank loans are up 6% since 12/31/09. Small bank loans are down 1% over the same time period. Big bank deposits are up 23% since 12/31/09. Small bank deposits are up 8% since 12/31/09.
Black and white but I suppose you'll still insist your comments are accurate. Baloney.
PS - much more to banking than loans and deposits. Big banks are killing small banks in non-interest income biz segments - wealth management, insurance, trust services, brokerage etc.