Here is a different interpretation of the lower write-off issue:
An interesting point arises: BB&T has about 30% more non-performing loans than Wells Fargo, yet its charge-offs are less than half as severe. What does this say about the companies? It could mean that BB&T is more efficient at getting troubled loans back in working order. That would also explain why BB&T doesn't have as much ammo in its allowance-for-losses account. This may sound boring, but it's vitally important. It means that BB&T could be better-suited to keep its head above water, as real estate continues to struggle and customers keep falling behind on their loan payments.
But wait ... doesn't Wells Fargo have a much higher allowance for loan losses? And hence, shouldn't it be more fit to stand up to the housing market? Yes and no. Having a massive allowance for loan losses isn't necessarily a sign of strength. It's sort of like walking around with a bulletproof vest: Sure, you're safer in the event you get shot, but wearing one in and of itself implies that you're heading into the danger zone. BB&T's ability to keep its net charge-off rate a notch lower means that it doesn't have to set more dough aside for a rainy day ... which means more money for you, the shareholder
Excellent insight. We all know that the subprime loan are mainly the ones with concerns; however, does anyone know how many of those type loans BB&T has? BB&T being conservative DOES NOT HAVE A SINGLE SUBPRIME LOAN!!!!! Therefore, you are not seeing the amount of writeoffs that the larger banks are having in turn not needing the amount of Ammo in holding.
Sure they do have construction loans that have problems....
BB&T is the odd man in this group an is simply getting pull down in value with the rest of the market. Very good buy right now and will outperform all other banks in the long run.
Agreed. BBT will be one of a handful of survivors in this banking debacle. It has already increased its marketshare. When the overall market turns, the stock price will again soar on the synergy between the fundamentals + short covering.