Implementing a cost competitive Wells Fargo branch strategy as discussed in recent wsj article is much more important than reducing regional structure. Also, I think they have ignored the importance of discount brokerage. There are plenty of folks who trade daily at discount brokers. Many carry big balances in cash even though current rates are 1 bsp per year. Many folks are not going to flock into bbt wealth management and pay a large fee relative to their return to have their money "managed". Also, I have found their insurance services to be non-competitive. I use Liberty Mutual Insurance through Prudential and was able to reduce my house, auto and umbrella policies by 50%. I'm hooked into their online bill payment - otherwise I would consider switching my direct deposits and visa to another bank who provides services I want.
USB is raising their dividend to $.28 qtr yielding about 3.5%. They sell about 10/11 times earnings. They don't have qualitative issues with the Fed. The same is also true about WFC. Yes, BBT may end up getting Fed approval in late 3rd qtr. to increase the dividend to perhaps a 4% yield vs. current price which I think makes it a good buy but I have serious reservations about current management credibility and trust. No better example than the $2 billion of charges for additional mark taken on bad loans via noninterest expenese. No other bank in America reported relative charges approaching anywhere close to this magnitude via noninterest expense. Plus the lack of transparency into the detail of these charges is a further insult to shareholder intelligence. Shameful.
Kelly King needs to consider retirement. He's expanding the board from 12 to 19 directors. Probably loading board with more of his cronies. His plan, I think, is to stay on for another 5 years. That's unacceptable. He paid himself a $10 million bonus in 2012 - which should be clawed back given that he flunked the Federal Reserve capital plan. Plus, King sits on the Richmond Federal Reserve Board so it shows how badly he miscalculated the Fed's response to his proposed capital plan.
I'm also concerned about bbt branch consolidation. Recent Wall Street Journal article discusses wfc branches of the future - 50% reduction in operating costs. I don't see this on King's list of things to do. I like banks that are anticipatory, not reactionary. On a personal note, I'm a personal investor and bbt does not offer competitively priced products and services. I do most of my business with Schwab.
I'm putting my money of wfc and usb on a market pullback. Might trade bbt some but until they make management changes and talk about the importance of reducing branch costs, I won't add to my position which I've decided to maintain because of tax
Imo, this bank has a big credibility problem. I think the Fed shares my opinion. The reo valuation adjustment is just one example. Shareholders over the last several years have been bombarded with about $2 billion of charges via the valuation adjustment for additional marks. No other bank in America has reported relative charges anywhere close to this magnitude. Yes, I understand estimating adc liquidation values is very subjective but the transparency showed by bbt in this area is very fuzzy at best. In April of 2011 at the annual meeting - q&a session- I asked Mr. King directly about the valuation adjustment. His response proved to be inaccurate.
Their bonuses should be clawed back since they flunked the Fed capital plan. Expanding the BOD is not the answer - we need better management and increasing emphasis on wealth management, particularly discount brokerage, an area where bbt is not competitive. Expanding in Texas is fine but how about consolidating some in their core areas. Mobile banking will become more important - branches are losing importance. About 2300 branches shutdown in 2012 (nationwide), about 2.5% of the banking sector and an estimated additional 15000 branches will shutdown over the next decade. How many branches did bbt shutdown or will shutdown?
PS - S&P downgraded bbt but left their rating at 5 stars. Credit Suisse prepares much better and comprehensive reports than s&p.
Good luck. Bbt 1st qtr. results will not be too exciting assuming no accounting manipulations.
You may get your wish. First quarter earnings are not going to be too exciting assuming no accounting tricks. I think you should seriously consider how this bank accounted for reos over the last several years. They took marks via the valuation adjustment totaling around $2 billion. I lost track of the marks on their reos but would not be surprised if it were 80/90%. This bank conceivably could have many hundreds of millions of dollars of prime adc properties carried on the books for pennies on the dollars. Wish I could quantify this area but the transparency has been very fuzzy at best.
Bbt flunked the capital plan likely on qualitative grounds. It was not due to capital levels. The pillars of this bank were built on integrity, honesty, trust. I believe the Fed has some serious questions - not only about the accounting of reos but other areas.
The bank has a responsibility to its stakeholders to come clean after they first receive authorization from the Fed. Flunking the Fed capital plan is a very serious subject. The bonuses paid to upper management should be clawed back.
Board of Directors urgently needs to fulfill its responsibilities and satisfy the concerns of all investors.