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BB&T Corporation Message Board

  • valueconvert valueconvert Nov 17, 2007 4:44 PM Flag

    Current thoughts on BB&T

    BB&T has only modest exposure to the credit quality problems in the mortgage market.
    Sub-prime and Alt A mortgage exposure:
    Through September 30,2007
    Sub-prime Alt A
    Total outstandings .5 bil 3.7 billion
    % of loans .5% 4.1%
    Average loan size $185,450 $331,130
    % first mortgage 81.8% 100%
    Average credit score 600 734
    2007 loss ratio .48% .03%
    No negative amortization loans or option arms
    Minimal buyback risk
    (source: BB&T Merrill Lynch presentation)

    The company has had a headwind because of the flat yield curve. As the yield curve returns to a more normal shape (i.e. steeper), net interest margin should recover somewhat.

    BB&T was not in the "originate and sell" business outside of Fannie and Freddie loans. Outside of fees related to mortgage origination, BB&T will not be losing major profit centers.

    If BB&T can grow at 7% for the next 5 years and return to a 12x multiple, an investor requiring a 9% CAGR could pay up to $57. Buying today gives an investor a 40% margin of safety. In the meantime, you get a 5.4% yield that is rock solid and quite likely to rise.

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    • boardnazi_is_a_company_schill boardnazi_is_a_company_schill Nov 23, 2007 10:35 AM Flag

      This is how I have played it, and some may think I am crazy.

      I borrowed $$ from my HELOC @ 7.5%. Assuming I am at a 20% tax rate, my true cost is ~6%. I bought 1,000 shares of BB&T the other day @ $32.75 with a 5.6% dividend yield. It only costs me $50/month in cash flow, while my potential for making $3K-$4K in a hurry is good, and long term I should make over $10K easy. The beauty of it (although painful) is that I have loss carry forwards from the dotcom bust that will make my capital gains tax free. This is my little arbitrage.

    • No need for personal attacks.

      I lived in W-S after college before b-school. I realize having an MBA hurts my credibility.

      After b-school, I lived in Atlanta briefly while job hunting.

      I went to NYC and started a money management firm, which grew to over $1 b and left me financially independent.

      I moved to CLT to raise my family.

    • theleastofyourworries4now theleastofyourworries4now Nov 23, 2007 9:34 AM Flag

      By simply saying that, does that make you more believeable?

      The answer: No.

      You are a shill, a joke.

      One question: If what you say is true, why have you moved around so much? (LOL)

      Thanks for the laugh-of-the-day.

    • nothingreallymatters4now nothingreallymatters4now Nov 20, 2007 5:53 PM Flag

      Valueconvert wrote, "Please remember, this is what I laid out as a "dream scenario."

      That's why I said what is said. To quote your boss, well-up-the-ladder, "What is, is."

      Anyone that posts "facts" to enforce the potential of a "dream" is like Still-so-poor thinking the neighborhood ladies want him for his body and his mind (LOL). Still, they want you for your big screen, plasma TV with surround sound, not the "little general." Ha ha!!!!!!!! God, that's funny.

      Value convert, my best advice to you is get your teeth fixed, get on a weight watchers program and lose some weight, quit looking at porn all night and, most of all, keep selling those loans. That's what they (bbt) are paying you to do.

      What is, is, baby.

    • Bought more this morning at 32.5

    • $500,000,000 of subprime credit is not immaterial for a bank with a very weak interest margin. Don't make the mistake of looking at dollars as a percent of total loans. You need to look at the profitability of those loans as the loss from just one loan far outstrips the profitability of 100 loans.

      As was written before, no one uses averages in statistical analyisis because it won't tell you anything. Here is an example for you

      Credit Scores Loan size

      475 $350,000
      550 $250,000
      575 $125,000
      600 $190,000
      850 $ 60,000

      Now add those together and divide by 5. Average score is 610. Average loan size is $195,000

      Is that meaningful? I think not. Yet this is the type of math used to report to Merrill Lynch and which most investors will look and say "oh that sounds reasonable".

      Did Allison tell the gathered that he has $122 million under water on the company's securities that haven't been impaired?


      • 2 Replies to xmsrlong
      • xmsrlong, you're making a good point in general, that there are other descriptive statistics to consider.

        But, with statistics, it's a matter left to whoever's reporting data and the analysis exactly what should be reported. Others may follow up with an inquiry or request if they feel something excluded ought to have been included, or if they suspect ....

        You make a good point, but, if it's been acceptable and customary to report this way, it's not a criticism that should be exclusively directed at BBT ... unless your insinuation's based upon what you know about the co.

      • 500,000,000 in sub-prime loans*.0048 loss ratio=2,400,000 losses

        2,400,000 losses/541,000,000 shares outstanding= rounding error

    • Amen!

    • This IS the BEST contibution to this board that I have ever read. THANK YOU!!!

37.85+0.08(+0.21%)10:15 AMEDT