I listened to Kelly then had to attend a meeting. Lots of information provided, I guess we have to wait for the analysts to digest the info and then spit up all the items they see as potential hidden agendas and downgrade BB&T some more.
Gee, Kelly can you provide us some detailed specifics on the unknowns and variables effecting BB&T's financial future? DUH!
Maybe if BB&T posted a huge loss and said it was going to lay off 30,000 the stock would go up. Just like BAC and C and STI.
I listened to about 1 1/2 hours after lunch today. The two speakers were Clark Starnes chief credit officer, and Ricky Brown, the head of retail banking. If you listened to these two gentlemen and did not rush out to buy stock, then at least you had to feel better about BBT. It's too long to go into now, but the detailed and conservative way they look at lending and reserves for delingquent accounts is unbelievable in the industry. In fact, the analysts applauded when Clark finished. Plus, the questions were just of a clarification manner as opposed to confrontational and negative. If anybody listened, they had to be impressed.
Only had about 1/2 hr. so I flipped through Kelly King presentation. Some of the highlights are:
1. 2009 net charge-offs were projected at $1.4 to $1.5 billion. King said that based on everything he knows today he's comfortable with this projection and said Kendall Clark would go into detail later in day. He said net chargeoffs were projected to drop off in second half of 09.
This is very good news considering that 4th qtr. provision was $528 million and destroys the credibility of Dick Bove's forecast.
2. Dividend - Assuming bbt does not bomb out on net chargeoffs, the dividend is safe according to King. Imo, I think there's a good chance that come the second qtr they may actually increase it modestly if net chargeoffs are still projected at $1.5 billion for the year.
3. CCP Money - King wants to be the first to give the Treasury back their $3.1 billion. Said that the bank reluctantly accepted the funds. However, the funds can not be paid back until year 3 otherwise the transaction is dilutive to shareholder equity (gov't gets warrants and common stock). This is great news because bbt will be earning an additional $450 million thanks to ccp money.
4. King said bbt should be coining money left and right once net chargeoffs tail off. Pretax earning before provison was been growing at a compound rate of 22.4% over last 10 or 20 years.
5. Pricing has improved significantly, up 125 bsp. King expects pricing will continue to improve with another 175 bsp to be realized in subsequent years. New loans are being written with floors and customers have offered little resistance.