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BB&T Corporation Message Board

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  • inlet_boater inlet_boater Dec 15, 2008 6:33 PM Flag

    No dividend increase

    As I understand it they are talking Alt-A (no doc or low doc) mortgages which are due to reset starting in January - if you are referring to 60 minutes expose.

    This was not new news, I recall this being discussed at least 6 months ago. I believe it was decided after discussion here BBT has little exposure to this type of reset mortgage. Second, in case you have not noticed interest rates (ie LIBOR peg) are down and resets could well be lower not higher next year (positive for these loans?).

    Dirt cheap acquisitions are a plus for BB&T. I think they will stick to doing these in their current 11 state area of business. They will attempt to increase density in areas where they are not #1 or #2 in banking (should allow for more efficient and profitable operations).

    As to Commerical loans - I'll take a swing at that also. Many commerical loans are have reset features. Now for the most part commerical loans are self paying (income from commerce more than pays the mortgage costs).

    The supposition is that loss of tenants etc may drive this income below what is required to cover mortgage payments. Guess what, many commerical loans are not structured like home mortgages. For example it may be a 5 year mortgage with a balloon, a Joint Venture loan (multiple responsible borrowers). Generally such loans are variable rate and get reset so any loss of tenants and income could be offset by lower interest expenses.

    Finally, management seems confident that it is a managable issue. Let's see how this qtr turns out and then we will have a clearer picture on CRE.

    Six months - still muddling?
    One year - problem loans and write offs on the decline and stock price up?
    Five years - BBT is operating in 20 states, and doing great!!!

    Now how is that for a crystal ball. Hehehe

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