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BB&T Corporation Message Board

  • PLanigan PLanigan Aug 13, 1998 3:33 PM Flag

    Why not Riggs?

    I would think that Riggs' geography would fill in nicely for BB&T...why no discussion? Riggs has not been at all efficient....does family own a large block?

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    • Why doesn't BBK augment their deposit gathering
      efforts by getting aggressive in an internet bank. They
      can pay higher rates and draw significant deposits.
      Look at NTBK and the other internet banks. The
      internet banks are having trouble making enough loans to
      sustain profitability. BBK could generate the deposits
      online and make the loans through their branch
      structure.

      Comments?

    • Thanks Doc - I knew you'd say that! And you're
      right, more branches usually do equal better service.
      The problem facing BBK and some others is how many do
      you really need to give better service? If your
      overhead structure is such that you can't be competitive
      in pricing loans, then you have a big problem. If
      you meet competition on loan pricing, and you want to
      survive with excellent EPS, etc., you must save $
      somewhere else. Where do you think they should get the
      additional savings? That's not a trick question, it's the
      reality that BBK and others like them have to face. Stop
      Y2K programing? No - can't do that! Cut back on
      advertising? Maybe, but what about those new markets who think
      BB&T means ......? I know, cut back on credit people!
      Yea, BBK's number are great! That's a great idea isn't
      it!

      See what I mean? I'm sure I don't have the best
      answer, but I still think they have too many branches for
      their market share. If you got a better answer, I'm all
      ears, but I really don't think they can continue to do
      nothing. Watch 3rd quarter operating ratio for key. If no
      lasting improvement (which has been slowing, but still
      there), they have hit the wall. Low loan loss alocations
      can not save the day for ever (take a look) and the
      clock towards a tough economy is ticking.

      I'm
      still long BBK, but I'm still here for the takeover. If
      they can move quickly on expenses, I'll stick, because
      at that point they really will have become the mgt.
      that Doc JJ seems to think they are! Let's keep our
      fingers crossed.

      Regards.

    • is an ongoing debate throughout all of banking.
      While its true and proven that we are all going to our
      banks less and less, most people will initially make
      their very first bank selection based upon location of
      a branch (close to home, school, work, or on the
      way to any of the above).

      There's the
      rub...need a good location to rope them in, need adequate
      service and facilites (i.e. branches, ATM, net) to keep
      them.

      I don't buy the theory that our children will never
      set foot in a bank, but I know for a fact that they
      will go to the bank less than we do (in case your
      wondering, my child is the most beautiful 15 month old girl
      in the whole wide world!)

      I think for BBK to
      expand into new markets, they will need the bricks and
      mortar, once they are established, they can trim
      back.

      FYI, for another interesting regional bank play, look
      at Popular (BPOP)...despite PR's terrible economy,
      they have put together some decent numbers and are
      really expanding down here. They already have the
      largest share of deposits in the USVI.

    • Stock:

      Does BBK need all those branches?
      The answer is an unequivacble (i wish I could spell),
      YES!!!!!!!!!!!!!!

      One of the biggest problems with acqusitions is that
      they always closed down some branches (if the new bank
      is in the area already). And you wanna hear whats
      funny? According to all my friends, it always THERE
      branch thgat closes! And then they have to start going
      to another bank that s miles away, and its more of
      an inconveniance. In truth, BBT did that in hampton
      roads in Virginia and its hard for folks to get used to
      a new branch.

      Small town banks succeed
      because they are close by, friendly, and they provide
      personal service to their customers. Thats why they are
      cropping up all over again.

      Enter BBK (no I don''t
      work for them). Maybe other banks can close down
      branches improving all those funny ratios you guys post on
      this board, but BBT serves its customers with friendly
      people, in convenient locations, with local management.
      In time, they will get a heavier reward.

      It
      kills me. FUNB has a phone in its branches to dial
      charlotte for loan assistance. What a crock. My BBT banker
      can approve a loan in front of me!!!!!

      OK, I
      am now taking off my rose colored glasses. Its just
      a good bank.

      Dr. JunJun

    • I think we're all in agreement about the
      risk/reward vs. pricing and terms issues. I guess we'll see
      how it all works out.

      My point about an uptick
      in interest rates being a sell indicator is based on
      my belief that this is a precurser for inflation and
      Fed. tightening. I agree that higher rates would be
      better for banks in general, if that means spreads are
      improving AND the Fed is staying out of the market. My
      concern is that inflation signs will return and the Fed
      will go nuts. They have shown great restraint over the
      last decade - really quite good performance compared
      to the 70's and some of the 80's - so I guess I
      don't expect them to over react, but I still remember
      the 70's & 80's.

      I wish I had Yankee's
      confidence in BBK as a "wise" player. WB has long been able
      to price loans cheap because fees drove their
      marginal profits so well. NB and FTU were also strong. STI
      ? I'm not so sure but all that Coke stock can't
      hurt. Where does that leave BBK? Playing catch-up, I
      think. They now have over 500 branches. Do they need
      that many? FTU and NB are closing branches left and
      right (I know Doc JJ - BBK gives better service with
      all those branches) and I think BBK must look harder
      at expenses if they are to continue to meet
      projected earnings. I think they are increasing
      securitization, but they don't have the machine like a WB, FTU,
      or NB. What does all this mean? I'm not sure, but I
      think it means that the size banks "on the bubble"
      could also include a BBK, ASO, etc.

      I've
      enjoyed everybody's posts the last few days and learned
      stuff. Thanks and keep it up!

    • While it is well established that regulators
      don't know their you know what from their elbow, they
      are picking up on the fact that margins are thin and
      risks are growing long. A number of banks are trying to
      implement profitability models to help them determine which
      credits are worth more over the life of the loan. Once
      they're identified, a bank can price these loans more
      competitively so they can hold them in their portfolio. What
      happens, however, is some banks without a great deal of
      expertise, are trying to price these loans so competitively
      that they are overexposed to credit and interest rate
      risk. These are the banks that the Fed and everyone
      else are screaming about. The thin pricing is very
      real and stems from the 'BigBoys' access to amssive
      amounts of cheap funds. On the credit side, however,
      these banks are still able to meet their margin and
      maintain their risk exposure. The smaller banks, those
      local yocal and almost-regional banks are trying to be
      so agressive to fend off the big boys that they are
      in grave risk of collapsing in the next downturn or
      interest rate hike. Banks like BBK, WB FTU, NB, STI,etc.
      will come out fine. Your First Citizens, Triangle's
      and other "on the bubble" banks have been pricing
      thinner and taking more risk...a deadly combination.
      Anyone remember banking in New England in the early
      nineties? I do, it wasn't pretty! It will repeat itself if
      this keeps up!

    • I understand some of your concerns regarding
      interest rates and bank performance, however, the two
      aren't always directly linked, and may be so in an
      inverse way if they are.

      Most banks would actually
      benefit from a steep increase in long term rates giving
      us a stiff yield curve. Most banks can reprice their
      loans within 12 months, deposits may need to be done
      sooner, but not as high. Other costs remain somewhat
      fixied.

      As a banker, I would prefer higher longer term rates
      instead of the current climate.

      There is also a
      growing contency made up be some people whom I respect
      that feel rates might even drop from here...imagine
      that!

      If you like banks as investments, I encourage you to
      all take a look at Fannie Mae, FNM,.....a first class
      operation in every sense and a worthy investment.

    • I am concerned about my BB&T stock (bank shares)
      and the
      BB&T Growth and Income Fund. Should we
      sell? The Growth
      and Income has really gone down. I
      am thinking about transfering
      the remaining money
      from the Growth and Income to Bank shares
      but they
      are not stable either. I am a novice investor
      and
      I need some advice from some seasoned investors.

      • 2 Replies to popcorn4000
      • Your worries over BB&T shouldn't be any greater
        than the market in general. Everything is off! it's
        only a matter of time until all the "profit takers"
        need something to reinvest in. Market will be up in
        Oct., only to have another sell off after Thanksgiving
        (Wall Street has developed a habit of swinging the
        market to make their own firm's returns better). It's
        tough being the little guy! Also, banks got hammered
        (just ask JP Morgan) over the asia situation. It's only
        a matter of time before investors realize BBK has
        absoutly no interest tied to the asian economy, directly
        or indirectly. It'll still outperform the industry.

      • Sure you may feel like your losing money and you
        may, this year. However, if you hold on for the long
        haul it will pay off. BB&T is a great stock, but the
        BB&T Gowth and Income Fund isn't so great. I would
        suggest asking your portfolio manager or doing as most of
        us do, read, read, read. Look at these funds
        carefully and make sure that they have good long term
        profits. (5,10, 15, 20 year returns)

    • Riggs doesn't have many branches and most of them
      are located in DC. There are only a hand full of
      Riggs branches outside of DC. Riggs will not sell. The
      largest stockholder in Riggs has made it clear that he
      will not sell his shares. This person is also on the
      board. He owns almost 50 % of the stock. I'm not sure of
      his name. The Washington Post had an article on Riggs
      about 6 months ago. FVB and PBKS would be with out a
      doubt the best purchases for BBK. There wouldn't be
      much overlap in these 2 banks. FVB is strong in VA and
      most of Marlyand. It has a small presence in
      Tennessee. Where FVB lacts exposure is in the Baltimore
      region of Maryland, coincidentally this is where pbks
      would fill that gap nicely. Mercantile is also based in
      Baltimore and is a better and much bigger bank than PBKS,
      but there would be several overlapping branches with
      FVB. Mercantile is about 7.5 billion. If BBK wants to
      get into VA, FVB is the only big bank left in VA.
      It's assets are 9.3 billion. The next largest bank is
      around the 2 billion range. Mercantile is the biggest
      bank in Maryland.

 
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