Yes and I think it would permit bbt to increase the dividend to $.20 qtr and still build significant capital. The bank had better loan growth than I expected so I believe net interest income should be $20 to $30 million higher. Nice improvement in deposit growth. Also, I was pleased with pretty much across the board improvement in credit, particularly the lower balances in the adc and commercial land stuff. 30 day delinquencies I believe dropped to the lowest level since mid 08.
My $.65 eps projection depends largely on:
1. Provision drops from 220 bsp in the 4th to 140 bsp in the 1st. Some folks may think this is pretty aggressive but over the last 2 years bbt has been making much better loans and I feel confident that the losses on the 2009 and 2010 vintages are 100 bsp or less. It time to start reducing the ALL given materially better trends in credit.
2. My projection assumes no valuation adjustment in the 1st qtr. In the 4th qtr, it amounted to another $100 million and the mark on oreos and loans held for sales was increased from 45 to 47% which I think is the 7th consecutive quarterly increases (material).
Clark Starnes said on the cc he expects declining valuation adjustments. What?? You mean to tell me 47% is not enough after all the deep dive appraisals and $700 million of extra mark expense recorded in non-interest expense over the last 2 years. His comments are bothersome and after $700 million of hits you would think it's enough.
When questioned, Starnes did talk about releasing some of the ALL in 2011 but did not quantify any amount.