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
Good question. Can't wait to hear stillstupidspoor answer that one. Let me guess. He'll say a couple more useless things and that BBT is still not sold (always love that one) and that JA is still at the helm (whatever that is).
I'm guessing "still at the helm" means the same thing as the stock correlation of being the approximate same value now as it was nearly 10 years ago and the same stiff suits cashing in stock options. Don't know what else at the helm could be. Oh, he also may go wawawawawawa.
The following chart may be interesting:
Allow for the anticipatory effect of speculation, there's been divergence and an inverse correlation since the summer. In a leading sense, DCR might also appear to anticipate regional banks.
Not to speak of well-defined bottoms, but, my opinion is that money's been returning ...
Yes they have a simple archaic underwriting process and as result they have run out of pig farmers to lend money to. Loan growth has been an issue here for a decade, similar to the period the stock price has been dormant. The reason the rating agencies got spanked is the intrinsic conflict of interest with the ABS issuers/conduits. No one had visibility that the AAA-rated tranches would be stressed...as the models' assumption were too shallow. BB&T's corporate credit model is something they bought from some consultant working out of his basement 20+ years ago....