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BB&T Corporation Message Board

  • onesigmavariation onesigmavariation Nov 29, 2007 12:56 PM Flag

    Regional Bank Advantages

    While most people think a bank's only function is to lend money, this idea ignores a bank's major function - to measure the credit risk of borrowers. A big issue with the current troubles in the financal system is the flawed credit ratings made by SP, Moody and Fitch on CDO and SIVs issued by money center banks. BBT is much closer to its borrower and is able therefore to better gague their capacity to meet loan obligations. BBT's mortgage loan guidelines are simply, 20% down or mortgage insurance on larger loan to apprasial value. BBT's risks are:
    a. lots of home equity loans that may not be 100% recoverable
    b. construction and land loans in the rapidly developing southeast US
    g. failure of mortgage insurers
    Despite these risks I think BBT is a sound and will capitalized bank that has sticked to its knitting and knows its customers, repeat knows its customers - the major protection for shareholders.

    owns 500 BBT shares

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