Bought 50 Oct 33 for $.25. My thinking is we were punished today by the overall downdraft created by the big banks. When the indexes get sold, we go down with them. Hoping for an adjustment Monday/Tuesday plus a pop from earnings. Thoughts?
Sorry about your loss on the Oct $33 and my bad advice. The earnings headline should have been $.72 eps before ex items on 8.4% loan growth. Outcome might have been difference if headline were worded differently.
I had about 3/4 of my bbt position hedged because of past management credibility problems so I did not get walloped. The time to buy bbt might be the quarter before they pay out their bonus shares - they sell their bonus shares so the gray area in accounting will likely be slanted in a positive direction in the previous qtr. earnings release.
King said on cnbc yesterday that bad stock reaction was due to comment made on margins dropping to 375 bsp in fourth qtr., down around 19 bsp from 3rd qtr. I disagree with his assessment. Last year he said nim would drop in 2012 to 375 bsp but it has remained in the mid 390's to 400 range throughout this year. Yes, covered loans are worth about 30 bsp on total nim but they're not going to drop off the books in the 4th qtr. Likely to see another $25 million reduction in covered loan nim - maybe weighted 7 bsp down. But new loans have gross yields on the average of 4.8% and deposit costs are 12 bsp, so that's a plus offsetting so of the covered loan runoff.
Don't understand many areas. Why is reo expense so high- $54 miliion with reo balance dropping to $139 million? What are the reo unpaid loan balance, net book value and % cumulative writedown? Why is bbt so secretive about this subject? Will the bank show gains eventually on the good adc stuff since apparently much of it has been written down to almost nothing. Tell me about the fdic reimbursement on colonial. Almost as much as 3rd qtr. of 2011 even though covered loan balance has dropped by say 40%. How about crump? 15% irr on $576 million purchase price is close to $100 million in cash. Where is it? Look at the insurance segment and don't see much of an improvement vs. last year even though pricing and same store sales are allegedly better? Why is the provision for bad loans flat vs. last year and is still running at close to 100 bsp while credit has improved so much? Why is BBT provision 4 times higher than MTB bank even though bbt nonaccruals, reos and past 90 days loans are significantly lower on a relative basis.
Also, why is King whining so much about the economy when consumer are just beginning to dig themselves out of debt. The fed's mortgage financial obliation ratio is at a 30 year low. Housing starts are beginning to climb. In the last 4 year construction has been rotten and is still floating at the bottom so we still have not gotten much of a bounce in employment - but it's coming with construction likely to add 4 million direct and indirect jobs over next few years. Yes, there is too much regulation and about 30% of Dodd Frank needs to be repealed especially the segment on debit cards but the whole bill should not be gutted.
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. I'm still licking my wound on the $2.1 billion of foreclosed property expense booked over last few years - mostly valuation allowance adjustment- taken to other income and expense - not loan loss provision. I have core value too - honesty and integrity and think we're on a different frequency.
"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."
Think your option purchase is a very good bet. Funny I've talked to JC Browns several weeks ago about doing the same thing you did yesterday. May do it on Monday if bbt does not rally. Friday I elected to buy jpm, wfc and more bbt. Jpm and wfc had very nice earnings report. Wfc grew their core loans by about 7% about the same as discussed by bbt in recent presentations. Only negative was nim shrinkage. I'm about 40% cash and have sold covered calls on about 60% of my equity positions. We're in for several years of slow growth driven by gov't austerity. We do have some positives though. Consumer indebtedness continues to go down. The Fed's Mortgage Finanical Obligations Ratio (mortgage, car and conumer debt plus homeowners and auto insurance plus property taxes divided by disposable income continues to drop. 2nd qtr. 2012 level is at the very close to the lowest level in 30 years. You can find it on the Fed's website. Yes, some of it is due to bank write-offs but much of it is driven by debt pay down and consumer refinancing. A second positive is auto sales. The average age of USA vehicles has increased every year for the last 10 years even when auto sales hit a record high of 18 million. Age is up to 11 years now vs. 9 years in 2002. Third positive is USA natural gas and oil. Since 2009 we have quadrupled the number of rigs drilling for energy in USA. Natural gas became so plentiful this year that it dropped below $2 per million btu. We're now exporting some of our oil. We're going to see a lot of new business develop in the USA over the next decade because of our plentiful supply of natural gas. That stage has already been set thanks to a federal gov't which greatly expanded drilling in spite of the BP oil fiasco.
So all is not bad in our country. Biggest problem is a Congress which is dominated by too many
members unwilling to compromise. Also some of them are out of their mind - i.e. Adam West, Joe Walsh, Michelle Bachmann. I disagree with Obama on about 25% of his agenda, particularly too many bank regulations. The liquidity and capital rules are fine but there are simply too many cross checks on everything which drives up the cost of business. Also, the gov't should keep its nose out of debit cards. Dick Durbin's amendment stinks. I like personal health responsibility - I'm tired of paying for other people's health care. I support the Affordable Care Act. I believe in kindness and am totally against altruism. Ayn Rand makes that distinction very well in Atlas Shrugged. Perhaps, Paul Ryan needs to reread that passage. Getting rid of Planned Parenthood is crazy Also, I'm dead set against Paul Ryan imposing his personal values into my life. I resent it. He has no right to take away personal freedoms.
Think the President will easily win. Governor Romney does not tell the truth on many issues. He certainly has violated core values of honesty and integrity. Frankly, he lies on just about everything subject. Don't understand how he can live with himself. Just because you're a politician it's not ok to demagogue. And that has become his speciality and he has really become good at it. What's so sad in my opinion is that a significant % of the American people are unable to determine truth from fiction. His 20% tax rate reduction with corresponding reductions in exemptions, deductions and whatever else is mathematically impossible. The top 1% get a $3 trillion tax rate reduction and you can eliminate 100% of their exemptions, deductions and loopholes and they still make a killing. Note that Romney has now prefaced his 20% tax rate reduction on growing the economy so it does not add to the deficit. Something new because he knows the exemptions and deductions are insufficient. So he's betting on the come and I view that as very high risk. Certainly, it's fiscally irresponsible and lacks conservative principles of sound judgement and objectivity.
If I could put one person in the White House I choose Jamie Dimon.
First of all, Planned Parenthood will not be gotten rid of, it will just not be funded by taxpayers. All you liberals that want to kill the unborn will still be able to do it legally, you will just have to pay for it by your own charities. It's amazing to me that liberals always cry freedom unless you disagree with them. Look at Detroit and all it's Democratic liberal mayors since 1961, all the liberal programs and leftist views being pushed. Complete failure and Chicago is on the same road with it's education. Seems to me when you see the failures that are so complete, we should change to a different tack before the whole country looks like Detroit and our kids are as stupid as those in Chicago.