I appreciate your comments Spin but there is a big difference between net cumulative charge-offs and provision vs. reo foreclosed property expense. In the 3rd qtr. bbt net cumulative charge-offs ex adc were 96 bsp about the same as the provision even though non-accrual loans continued to declined significantly and compare very favorably to big tier banks.
The reo foreclosed property expense is a different story. It become a big joke. Kelly King has a responsibility to provide fair and honest disclosure. I want to know the principal balance of reo loans and their carrying value by loan category.
Cumulative reo charges have amounted to $2.1 billion and have almost doubled since 4/11 when I asked Kelly King at the shareholder annual stock meeting about this subject. Both of us know that there is no other major bank in the United States who have accounted for a major portion of their reo write-down through other income and expense.
As a personal investor I have decided to place a 10% discount on bbt share price due to my personal issue of fair and honest financial reporting. I'm lucky I hedged most of my bbt position with covered calls to absorb some of the shock.
The King/Bible/Starnes BBT troika won't give you what you seek. To do so would be tantamount to admitting that the last 4 years of of NPA/TDR warehousing has all been a shell game. There is no upside for them to do this and come clean.
Expect a continued process of ongoing charge-offs/reo marks and higher provisions that continue to bleed ROA. This will continue until the NPAs/TDRs are all written down clearing values and only the troika know how long this will go on for.
It must have been tempting for BBT to use the regulatory guidance in Q3 as an opportunity to take some more wholesale writedowns on NPAs to make them closer to market and relieve future foreclosure and provision expense, however my view is that BBT are stuck and didn't implement the Regulatory directive on NPA writedowns in Q3 as BBT wanted to ensure they were in line with their peers on this comparable directive across banks.
Just what I would expect from BBT -- focus on the optics vs the economics. Just a 10% discount for being misled? Your brave.
The end result of all this minutiae and contrived expense management is very simple. BB&T's vaunted credit model was not so good, and is not so good. Unless you change the cooks you will not get any different result. They have mediocre talent. I think I have said this now for five years. BB&T considered itself sooo smart for not getting in bed with the securitization and cds game, but in reality that was just luck...they didn't understood those products; but as history has shown, they also did not understand... (wait for it)....credit. Their lending was awful, but optically looked better than all the toxic securitized crap. Their assets are not as good as they would have you believe (for the last several years) and they simply have not taken advantage of market dislocation to grow good share and good assets from 2008-2011. Now you know why. But if you knew this bank, instead of just swallowing their press releases and investor presentations (and then repeating the same flawed content as gospel.. cough ....Norm) you would already be way ahead of the hounds. As somebody else pointed out recently, it has been 14 years of crummy results...I agree, and hate to say i told you so, but will say so and keep telling you same.