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  • normlasky normlasky Nov 3, 2011 7:15 AM Flag

    stupid move

    Purchase of the good bbx loans, deposits and their 78 branches has a nice return - "comfortably in excess of 15%"and will now give bbt a major presence in southeast Florida. Bbt has an excellent presentation of the bbx purchase on their website. The loans were marked 7% and I suspect we'll see some positive accretion from the loan mark. I think we'll see bbt make additional acquisitions of small banks of this magnitude as long as bank prices remain below tbv. The ffch community bank I mentioned has very similiar characteristics vs. bbx - 75 branches located on coastal sc, $2 billion in loans, $3 billion in deposits, currently selling at 2/3 tangible book value. This makes much better sense than taking on all the bad loans and related liabilities such as the rbc purchase by pnc. This is one reason I support Kelly King even though I think his compensation is high but in line with the industry.

    Bbt also has a good presentation of the bank's 4th qtr. outlook on their website - dated 10/26. Note the comments made on loan and deposit growth and credit costs. Also, note that they now say that early stage delinquencies have returned to their 2006 level when bbt bad loan expense was about 50 bsp per year. Based on their mix of loans their normal bad loan expense will probably settle in the range of 60 to 80 bsp as noted by King.

    Credit Suisse and the other bank analysts need to revised their 2012 forecasts because the foreclosed property expense in 2012 is essentially unchanged vs. 2011. I suspect Clark Starnes will provide further clarity on this in his presentation.

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