"Why is BBT provision 3 times higher than MTB provision even though their current bad loans on a relative basis are about the same?"
It should be no surprise by now Norm, we've been back-and-forth on BBTs backend loss strategy since what 2008? We'll this is what the backend looks like: a thousand small cuts driving disappointment in the Longs.
The NPAs aren't marked correctly and BBT have to keep gradually writing them down like a melting glacier --more bleeding to go via provisions and forclosure expenses but the worst is behind them. MTB/WFC/USB etc all took the medicine up front -- King decided to a/mismark the NPAs then b/ look y'all straight in the eye and firmly say 'Our underwriting is good and the marks are correct.' c/ then keep gradually charging off and using forclosure expense and hope no-one notices.
Funny how no other major bank seemed to have this issue with NPA valuations declining that BBT seems to keep falling back on to justify the continued gradual writedowns.
You'll endup driving yourself insane torturing yourself comparing BBT to a high quality banks like MTB/WFC/USB. King just isn't that smart.
"Investors need and expect answers."
King has already given you his answer - Focus on the new magic-metric invented by BBT this Q 'Core-NIM'
Q4 kitchen sink coming up. BBT love Q4 to shovel more bodies out the backdoor hoping no one will notice.
I appreciate your comments Spin but there is a big difference between net cumulative charge-offs and provision vs. reo foreclosed property expense. In the 3rd qtr. bbt net cumulative charge-offs ex adc were 96 bsp about the same as the provision even though non-accrual loans continued to declined significantly and compare very favorably to big tier banks.
The reo foreclosed property expense is a different story. It become a big joke. Kelly King has a responsibility to provide fair and honest disclosure. I want to know the principal balance of reo loans and their carrying value by loan category.
Cumulative reo charges have amounted to $2.1 billion and have almost doubled since 4/11 when I asked Kelly King at the shareholder annual stock meeting about this subject. Both of us know that there is no other major bank in the United States who have accounted for a major portion of their reo write-down through other income and expense.
As a personal investor I have decided to place a 10% discount on bbt share price due to my personal issue of fair and honest financial reporting. I'm lucky I hedged most of my bbt position with covered calls to absorb some of the shock.
The King/Bible/Starnes BBT troika won't give you what you seek. To do so would be tantamount to admitting that the last 4 years of of NPA/TDR warehousing has all been a shell game. There is no upside for them to do this and come clean.
Expect a continued process of ongoing charge-offs/reo marks and higher provisions that continue to bleed ROA. This will continue until the NPAs/TDRs are all written down clearing values and only the troika know how long this will go on for.
It must have been tempting for BBT to use the regulatory guidance in Q3 as an opportunity to take some more wholesale writedowns on NPAs to make them closer to market and relieve future foreclosure and provision expense, however my view is that BBT are stuck and didn't implement the Regulatory directive on NPA writedowns in Q3 as BBT wanted to ensure they were in line with their peers on this comparable directive across banks.
Just what I would expect from BBT -- focus on the optics vs the economics. Just a 10% discount for being misled? Your brave.