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BB&T Corporation Message Board

  • normlasky normlasky Nov 8, 2011 9:27 AM Flag

    Credit Suisse

    Credit Suisse 10/20/11 is projecting that bbt will earn $1.81 in 2011 and $2.16 in 2012. Craig Siegenthlar approved this projection. He's a CFA which I suppose gives his estimate immense credibility. His price target for bbt for the next 12 months is $25 share.

    As I have discussed in previous positings, I believe his 2012 projection grossly over-estimates bbt credit costs and substantially understates eps. This certainly has had a very negative impact on bbt share price and shareholders imo have been damaged due to the lack of objectivity on his part. It's good to be conservative but estimates need to be supported by logic and good judgement.

    Siegenthlar 2012 projections shows that non-personnel expenses in 2012 will be flat vs. 2011 at about $2760 million which includes about $600 million of foreclosed property expense. Most of the $600 million is mark to market on bbt oreos to increase the 9/30/11 mark on the oreo balance of $950 to about 60%. His 2012 projections also only shows a modest reduction from 2011 in the provision for bad debt. It only drops from $1209 million to $1188 million which is still about $450 million above bbt normalized level of 70 basis points. His projections also does not appear to factor in any improvement in profit from the huge cost (added personnel, professional services etc) to liquidate reos in 2011.

    At the recent bank presentation, Clark Starnes, chief credit officer, stated that bbt foreclosed property expense will drop $450 million annually. He also said that on top of the $450 million annual reduction there will be another $250 million annual improvement in profit from other non foreclosed property expenses driven by reo disposition.

    So what's the bottom line?

    $450 million reduction in foreclosed property expense, another $250 million in non foreclosed property expense and $450 million in bad debt provision assuming normalized losses. Total $1150. Assume bbt realizes say 75% of this total in 2012 or $860 million. Assume 25% tax rate. EPS effect is plus .$.92 and Siegenthalar's projection for 2012 would exceed $3 share.

    All of the above of course is my opinion. Do your own due diligence. Good to be an independent thinker and not accept the opinions of analysts when the facts do not support their projections.

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    • Norm - You are 100@ correct in your message concerning Credit Suisse and Craig Siegenthaler. That gentleman is either a criminal or he is stupid - that is my opinion. BB&T is my largest holding and that gentleman has done considerable harm to my portfolio through his ignorance or desire to manipulate the stock price. Thanks a great deal for your post and lets hope someone with influence and some common sense at Credit Suisse reads this message board. Enough said!

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