Isn't it time for BBT stock price to profit from the acquisitions over the last few years. The bank has grown dramatically, mostly through the 'Operation Eagle', the acquisition of Colonial Bank by BB&T, but also of BankAtlantic. That growth should spur income....
Yours is an excellent question. I've owned BB&T for years. The bank keeps growing, acquiring other banks and insurance firms, etc. I keep thinking BB&T stock is going to rise dramatically due to all the growth. Instead, the stock price stays nearly the same because BB&T spends its profits on buying ever more new businesses. If you don't believe me look at the stock price over the last 15-20 years - very little increase. Interestingly the salaries of the CEO and other top brass skyrocket, but not the wealth of the lowly stockholders. Am I wrong?
You are only partially correct. Several years ago King was quoted, when asked why the bank had not made significant acquisitions during the depths of the recession (when so many banks were in trouble), as saying that BB&T had no idea how to value the assets. But yet, that is exactly what he and his staff are paid to know how to do. They did acquire assets, but not nearly in the scale they could have. Growth, though, is not effective if not made at the right basis nor if not financed properly. BB&T has never known how to effectively finance its balance sheet. Over the past 15 years its cost of capital has always been higher than the more profitable money center banks. It has been financed more like a 1970s-era thrift. Fear and luck have pulled BB&T thru this recession, not skill. To remain remotely competitive, they cling to silly expense controls and credit underwriting which simply reward mediocrity, attract mediocre talent, and provide mediocre returns. And their customer base is shrinking. Traditionally, BB&T catered to a more middle-class/lower middle class retail customer... those types of customers are broke (as is most of the middle class). Instead, they have attempted to swim upstream and gain both NIM and fee income by pursuing more commercial/corporate lines of business. Unfortunately, they mistakenly have believed they could underwrite and participate in this more complex financial universe with the same mediocre talent that formerly made car loans, HELOC loans, and handed out peanut brittle over the Holidays. It is a little different when pitching a $150M credit, and your only source of expertise is hiring lawyers who have handled such similar loan docs for other banks. This is why the bank's stock has been stuck for 12+ years. It is just not that well run of an institution. The only thing they did right in the past 20+ years was start pursuing bricks and mortar community banks in the early 90s when everybody else thought that internet based banking was going to replace the old "bank branch" model. Again, just lucky, not smart.
Just how long do the shareholders have to wait? This same message has been appearing in this or a similiar form for about 12 years. In the mean time the good old BOD and company executives have gotten big money for keeping the stock price below the end of year 1998 price per share.
Anyone who runs several billion of charges through foreclosed property expense with the vast majority of it relating to inadequate marks required to liquidate properties hurts his reputation and credibility. Go back by quarter and add up all the foreclosed property expense. Last quarter it was still significant - probably about a nickel per share. When is it going to stop? Bbt foreclosed property balance is not large but it may have a cumulative mark of 80 - 90% because of the valuation charges which shareholders have been bombarded with quarter after quarter. I've lost track. What really burns me are the stock options exercised at $16.88 per share by management. Imagine someone like Clark Starnes who was in charge of the adc $9 billion fiasco receiving large profits from stock options.
At one time King talked about holding $500 million of really good adc stuff which had no market. Does the bank still have this stuff and has it been completely written off. I need to be enlightened but I doubt we get straight talk. That's my opinion.