"I read the transcripts of jpm, wfc, usb and pnc. Think I understand. Then, I read bbt transcript. I'm confused. The transparency is not there particularly the reports provided by Clark Starnes, their chief risk officer."
Come on Norm - BBT has always played shell games with there accounting to hide the poor economics. Transparency has never been there.
Oh wait... This explanation from King should help:
"Matthew D. O'Connor - Deutsche Bank AG, Research Division
Yes, I guess I'm still a little confused. I mean, so the purchase accounting accretion
will be coming down from this level going forward as it has been. And then, I mean --
is that $90 million? I guess -- I know there's some puts and takes, but I assume that
should be coming down...
Kelly S. King -
Say, Matthew, let me hit it because it's always been confusing to me. But basically, so
think about it this way. The revenue is coming down, but the negative FDIC hit is coming
down also. So in other words, you get a negative end, so revenue is coming down, but you
got a positive and that the negative FDIC charges is reducing. The FDIC charge is not going
up, it's going down, that's the positive benefit."
Contrary to what Mr. King says, the fdic charge increased during the quarter even though the covered loan net interest income ramped down as expected. An obvious contradiction to the question.
I'm not clairvoyant and certainly did not expect adc land to become almost worthless so I gave bbt management the benefit of the doubt. However, in April of 2011 I asked Mr. King directly at a shareholder meeting about the $1.2 billion charges to foreclosed property expense with most of it valuation allowance. Response to my question - worst is over. Well that did not happen. Bbt has charged an additional $.9 billion to foreclosed property expense. I've lost track of the mark on foreclosed property but its got to be 85%.
I don't know what's going on here but with only $139 million in foreclosed property expense which has been written down mucho and real estate values starting to raise, it is unacceptable to see a continuation of significant foreclosed property expense. How come virtually every big bank in America has not had anywhere close to the foreclosed property expense reported by bbt??
Yes, it has been a shell game to preserve shareholder value but it's time to play it straight up with respect to some of the questions I've raised.
King's FDIC answer was gobble-de#$%$ at BBTs finest. Just like BBT's accounting on NPAs that frustrates you so much. There is more to come. The NPAs and TDRs are still mismarked.
Each time a NPL washes through to REO and then finally sale, foreclosure expenses are required to correct the mismakrs that are still present on the balancesheet. Its part of Kings shell game to make the provision look light just like the shell game where King introduced core vs Non-core charge-offs and this quarters shell game of introducing Core vs Non-core NIM. King focuses on what analysts wan't and ensures the accounting chosen maxamises that metric. King can't change the economics of BBTs prior bad underwriting - just delay and spread-out the hit.
You still got Q4 regulatory clean-up on BBTs NPA assets to look forward to. Funny how every other major bank was able to get it done and take the hit in Q3. Not BBT though. It will be a nice big chargoff that you will be asked to ignore as a one time or 'Non-Core' charge as King likes to put it.