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BB&T Corporation Message Board

  • I read BBT as fully priced on a times book and
    times earnings basis with the historical norms for this
    industry. What is it that makes it a good buy in
    anticipation of an acquisition by a larger bank? At 2.61 times
    book currently, I don't see much upside in the
    premium. Your thoughts?

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    • There was not much of a rate incease through Q3,
      I don't have the dates on hand but am thinking it
      was September when the first bump occurred...may have
      been October (help anyone:-)). Any increases would not
      have much of an anualized effect on last years
      earnings. I'm thinking more about the next few
      quarters....though I (FWIW) think at year end we'll be where we are
      now with respect to rates.

    • for your statement"BB&T is really quite
      vulnerable to a rising rate environmrnt". I understand
      no-one is bulletproof, but the reported facts on p.8 of
      the press release financials showing an increasing
      net interest margin tells me assets are repricing as
      fast as liabilities for the periods indicated. And
      these margins are better than the average for both
      large-cap and mid-cap banks thru Q3. It seems a stretch to
      assign more rate risk to BB&T than the group.

      Fan

    • BB&T actually is quite vulnerable to a rising
      rate environment. The strategy of buying small
      community banks may bring deposits, but it also can bring a
      wealth of low fixed rate loans. Banks gearing for a sale
      (including SNB and UCB) will often bulk up assets with low
      or even below market fixed reate commercial loans.
      Likewise with many of the mortgages which came with the
      S&L acquisitions of the past.

      BB&T needs
      another large...or several small acquisitions in order to
      continue to improve the efficiency ratio and continue to
      increase non interest fee income. No Y2K spending going
      forward will go straight to the bottome line however,
      which will help.

    • BB&T's asset/liability mgt. system is highly
      regarded and this year's result proves that BB&T and many
      banks are much less sensitive to interest rate
      fluctuations than the market is willing to recognize. The
      quarterly net yield on earning assets during rising rates
      this year has actually risen from 4.25% in March to
      4.26% in Sept. to 4.28% in December. (see last line on
      p.6 after clicking on "complete financial statements"
      at the bottom of the earnings press release
      available on bbandt.com
      home page. Poss is also right
      that simple hedge derivatives are used to balance the
      risk position. It's a shame the analysts who follow
      banks haven't been able to convincethe market of the
      progress made in this regard. Also remember the community
      banks bought by BB&T usually have a wealth of lower
      cost retail deposits which helps the net interest
      margin. I think

      Note today: CIBC and Legg Mason
      upgrade BB&T to BUY, stock is up 2 1/2 so far. Long and
      lovin' it!

      Fat Fan

    • And here I is overweight as more than 50% of my retirement funds be BB&T!

    • OK......I'll take a shot at it...but without
      taking the time to justify what I say by running through
      all the mathematical comparisons.

      It appears
      as if BBT is a bit more dependent on retail funding
      than are some of its competitors, such as say
      Wachovia, which are more dependent on wholesale
      funding.........medium-term wholesale funding. In a rising rate environment,
      such as the one now existing, there is a propensity
      for an inverted yield curve, with rates on short-term
      deposits rising faster than rates on long-term funding.
      Therefore, on a relative basis, BBT's net interest income
      gets hit a little harder than does some of the others.
      Of course, some of that can perhaps be offset by the
      use of derivatives and the like.

      poss.

    • a poison pill or two and this will provoke a premium in the event of a buyout.

      • 2 Replies to ccrossingham
      • titanium_bikes_are_overrated titanium_bikes_are_overrated Jan 10, 2000 7:33 AM Flag

        A potential acquiror would already know about the
        poison pill provisions. Therefore, what you have heard
        presumes that an acquiror is WILLING to pay a price
        acceptable to BBT. IMHO, then there is really no
        'premium'.

        BBT management is young. Any acquisition of it that
        would be acceptable to it will depend on what kind of
        solid gold employment and/or compensation arrangements
        the acquiror may wish to make with
        Allison.

        I'm would think that the payoff compensation lessons
        learned by BBT's arrangements with Glenn Orr have not
        been lost on Allison and company. However, I really
        wouldn't think that an acquiror would be willing to pay
        anyone at BBT $1.7 million forever.

        BBT is a good
        outfit, but it ain't that good.

      • Point taken, but what are the pills, and how much premium vs. scare off acquirers?

    • Did PMB shareholders approve the BBT buyout? I thought that vote was today. I have seen no news.

      Thanks

 
BBT
37.04-0.08(-0.22%)Aug 22 4:00 PMEDT

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