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  • jrpalladin jrpalladin Oct 19, 2012 11:17 AM Flag

    Norm - What do you think?

    Sorry about your loss on the Oct $33 and my bad advice. The earnings headline should have been $.72 eps before ex items on 8.4% loan growth. Outcome might have been difference if headline were worded differently.

    I had about 3/4 of my bbt position hedged because of past management credibility problems so I did not get walloped. The time to buy bbt might be the quarter before they pay out their bonus shares - they sell their bonus shares so the gray area in accounting will likely be slanted in a positive direction in the previous qtr. earnings release.

    King said on cnbc yesterday that bad stock reaction was due to comment made on margins dropping to 375 bsp in fourth qtr., down around 19 bsp from 3rd qtr. I disagree with his assessment. Last year he said nim would drop in 2012 to 375 bsp but it has remained in the mid 390's to 400 range throughout this year. Yes, covered loans are worth about 30 bsp on total nim but they're not going to drop off the books in the 4th qtr. Likely to see another $25 million reduction in covered loan nim - maybe weighted 7 bsp down. But new loans have gross yields on the average of 4.8% and deposit costs are 12 bsp, so that's a plus offsetting so of the covered loan runoff.

    Don't understand many areas. Why is reo expense so high- $54 miliion with reo balance dropping to $139 million? What are the reo unpaid loan balance, net book value and % cumulative writedown? Why is bbt so secretive about this subject? Will the bank show gains eventually on the good adc stuff since apparently much of it has been written down to almost nothing. Tell me about the fdic reimbursement on colonial. Almost as much as 3rd qtr. of 2011 even though covered loan balance has dropped by say 40%. How about crump? 15% irr on $576 million purchase price is close to $100 million in cash. Where is it? Look at the insurance segment and don't see much of an improvement vs. last year even though pricing and same store sales are allegedly better? Why is the provision for bad loans flat vs. last year and is still running at close to 100 bsp while credit has improved so much? Why is BBT provision 4 times higher than MTB bank even though bbt nonaccruals, reos and past 90 days loans are significantly lower on a relative basis.

    Also, why is King whining so much about the economy when consumer are just beginning to dig themselves out of debt. The fed's mortgage financial obliation ratio is at a 30 year low. Housing starts are beginning to climb. In the last 4 year construction has been rotten and is still floating at the bottom so we still have not gotten much of a bounce in employment - but it's coming with construction likely to add 4 million direct and indirect jobs over next few years. Yes, there is too much regulation and about 30% of Dodd Frank needs to be repealed especially the segment on debit cards but the whole bill should not be gutted.

    I read the transcripts of jpm, wfc, usb and pnc. Think I understand. Then, I read bbt transcript. I'm confused. The transparency is not there particularly the reports provided by Clark Starnes, their chief risk officer. I'm still licking my wound on the $2.1 billion of foreclosed property expense booked over last few years - mostly valuation allowance adjustment- taken to other income and expense - not loan loss provision. I have core value too - honesty and integrity and think we're on a different frequency.

    • "I read the transcripts of jpm, wfc, usb and pnc. Think I understand. Then, I read bbt transcript. I'm confused. The transparency is not there particularly the reports provided by Clark Starnes, their chief risk officer."

      Come on Norm - BBT has always played shell games with there accounting to hide the poor economics. Transparency has never been there.

      Oh wait... This explanation from King should help:
      "Matthew D. O'Connor - Deutsche Bank AG, Research Division
      Yes, I guess I'm still a little confused. I mean, so the purchase accounting accretion
      will be coming down from this level going forward as it has been. And then, I mean --
      is that $90 million? I guess -- I know there's some puts and takes, but I assume that
      should be coming down...

      Kelly S. King -
      Say, Matthew, let me hit it because it's always been confusing to me. But basically, so
      think about it this way. The revenue is coming down, but the negative FDIC hit is coming
      down also. So in other words, you get a negative end, so revenue is coming down, but you
      got a positive and that the negative FDIC charges is reducing. The FDIC charge is not going
      up, it's going down, that's the positive benefit."
      -BBT Q3-2012


38.80-0.16(-0.41%)Oct 21 4:02 PMEDT