purchased Main Street Bank which had several
branches in Lynchburg, VA. In the process BB&T has lost a
good chunk of Main Street's customers to banks such as
First Virginia, One Valley, and Central National.
The reason- The company I work for owns, among other
commercial property, ten convience stores and two hotels.
BB&T started charging for change, something the other
local banks have never done, and BB&T has sent notices
out that they will charge fees for checking
Since most of the employees also obtain car loans and
home loans from the same bank, it seems stupid to
drive off this business.
We have moved our
account, and it is not a small one either.
Several sources in Georgia say BBT is rumored to
be interested in Synovus Financial. Would be a great
fit and give BBT a big market share in GA., along
with better market share in SC, some in Alabama and
North Florida. Also, SNV is strong in credit cards with
TSS and electronic commerce software. Allison and
Blanchard think a lot alike.
I hear you and don't disagree too much. I do
think that my point on how long it has been since an
economic downturn is a valid one, however. And remember,
BBT is much, much bigger and more diverse now (i.e.,
in the last 5 years) than it was for the 15 years
preceeding that. I'm not trying to say the glass is half
full, I'm just pointing out that this may be looked at
as a somewhat new challenge.
I'm still long
BBT, But I will probably bolt if ecomomy tanks or we
reachs 40's again. At least I will take some profits if
4o's again. Hey - what do I know -I'm just having fun
with this stuff! I ain't no stinking day
Anyway - I think we agree somewhat. At least that's a
P.S. We all know you're really John Allison. Fess
truth, the readers and the nature of this medium
where you really don't know who your're talking to, the
facts I post come from an accumulation of public
information, annual reports, quarterly reports and 10q's &
10k's from the net. I try to differentiate and identify
my opinions as such for the same reason. Our
difference (from reviewing our posts) seems to be that I
come from the school of "the glass is half full". No
apologies. Particularly when supported by historical
performance. By the same token, some people are more skeptical
than others which is fine.
For example, the
issue of loan quality; over the last 20 years through
up and down rate and economic cycles, It's been
reported in annual meetings and other places that BB&T's
loan charge-offs & past dues have consistently been
1/3 to 1/2 the peer group average. What's the reason?
As a s/h, I'm comforted to know the same senior loan
staff has been in the bank during this period; as a
small business lender they make a lot of loans, but
don't take a lot of large risks i.e. out of market or
international; the portfolio is increasingly differentiated by
expansion into new markets where small business lending is
pretty much the same as in traditional markets. They
have a very disciplined review process and key senior
mgt. grew up thru the lending function.
all this mean loan losses aren't tied to the economic
cycle? - Nope, it doesn't, losses typically follow the
But, in a down cycle, my money is on the track record
(below peer group loan problems) which from my
perspective looks good. When times get tough, investors
differentiate performance. My opinion: I like high performing
(over the long term) banks who stick to their
I sleep good at night but I understand and respect
fast track investors who want more action and quicker
turns on their money.
operate on the local level? What is the credit
process, etc? Anybody know? Regards FTU....middle
management is so weak and politics, not rational business
sense, rules. Aside from pure size, I don't think it
You're right, of course. Any incentive program
can give you lousey results when targets change. That
same incentive program is giving us the results we
like now, though. Let's hope that BBT changes the
targets when the appropriate time comes.
the Capital Markets stuff - maybe we should be glad
that BBT has been late getting in it. I doubt many of
BBT's current customer base are really into swaps, etc.
anyway, even though I understand this kind of stuff is
moving "down market" - (I think I said that right).
Anyway, your points are on target. Time will
You make excellent points. I will attempt to add
two more to merely supplement yours.
banks have added incentive compensation programs, and
put them in place SUBSEQUENT to the last big economic
down-cycle. That means that individual loan officers have
been paid money to book more loans, and probably some
of them are of a questionable nature. Some of those
loans will come home to roost in the next economic
down-stroke............it has already begun to some degree at First Union
and Hibernia in New Orleans.
to the last big economic down-cycle, let's not
forget all the so-called capital markets voodoo that
many banks have put on. Interest rate swaps, caps,
floors, teflon skidoos, which-shell-is-the-pea-under
stuff. To read the info put out by the banks, THEIR bank
will be a WINNER if the economy tanks. There will be
no loosers. Sounds like a free lunch to
me........and we all know what they taste like.