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  • normlasky normlasky Nov 6, 2011 6:11 PM Flag

    Who Do You Trust?

    Not that it matters anymore Inlet but bbt has taken around $400 million of additional marks on their reos September YTD. That's equals around $.17 cents per qtr. At 9/30/11, there marks on reos is around 60%. If you anticipated this, you are indeed clairvoyant. I certainly did not.

    Read Clark Starnes 11/3 presentation. Many analysts are going to wake up soon and realize that Credit Suisse's credit cost projection for 2012 is vastly overstated. The provision for bad debt expense in 2012 will drop significantly from around 120 bsp in 2011. Credit Suisse predicts it will be the same next year. Baloney!

    On top of this Clark Starnes said in his presentation that foreclosure expense (primarily additional marks) and other reo expense (professional services, personal etc.) will drop in 2012 by $700 million. This is on top of the provision for bad debt expense reduction which I think will drop by $200 to $300 million vs. 2011. Starnes said that early stage delinquencies at 9/30/11 are at the same level as 2006.

    Awful big numbers which I believe you and the street still do not understand.

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    • Norm - I am saying you ignore the macro picture at your own risk and that the micro picture only tells you so much.

      The world financial system is a total mess. Europe is near an abyss. Emerging counties are starting to falter. The Fed and the DC politicians are clueless as to what to do. If they referred to Levicitus chapters 25-27 about the Jubilee year (every 50 years --- hmmm the K-Wave) they might catch a clue. Those who ignore history and the wisdom of the ages are doomed to repeat it.

      Until the financial system is flushed - the best case is the economy struggles, but more likely we see a recession starting in 3-6 months. BBT is not an island and cannot escape what happens in the overall economy.

      • 1 Reply to inlet_boater
      • The international monetary fund projects world growth in both 2011 and 2012 at 4%. True, it's down from a prior projection of 5% but it certainly does not suggest we're going into a worldwide recession. US banks are in great shape. European banks need several years to increase their capital base and deleverage some. And yes, there is quite a bit of sovereign risk which compounds the problems of european banks but they're not going over the cliff.

        I think your opinion is clearly not supported by a very broad base of economic data.

        Perhaps you would like to point out economic data which shows the world economic is likely to shrink?

        As long as worldwide populations grows by 2% per year and large portions of the Asian population move out of poverty, the world will see growth.

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