BB&T Bank: A Rose Amongst the Thorns

I have mentioned in passing BB&T (BBT), a regional, mostly east central coast bank, in a positive light. I now bless this bank stock as a financial institution on track and aggressively pursuing retail and business customers through client-friendly branches in superior locations.

A few days ago, I decided to test the bank's services with a division loan officer for conservative construction projects I was beginning in coastal North Carolina. My initial phone call was both pleasant and channeled directly to the person who could be of assistance. My appointment was at 10:00 a.m. and, in spite of substantial activity within the bank, at 10:00 sharp I was invited into the office with a nicely brewed cup of coffee in hand. Appreciating the clean and professional surroundings, my new-found banker re-directed calls to another employee so we could have a non-interrupted discussion of my needs and BB&T's solutions.

Although my proposal was more complex than the average borrower, I was quickly brought up to speed with the latest rates, terms, fees and discounts (these actually were updated by computer during our meeting, in my favor). Not only was BB&T treating me as an old friend (this was my first venture into their banking system) but gave me rates and terms that would make Barney Frank and his TARP dream a reality - banks using TARP funds as loans money. The question was not "What can we do to prevent you from getting a loan?". Rather, it was "Here is all the money you need and we want to build a relationship with you to get all of your business". After going over the docs and finalizing the loan process, I state without hesitation that if BB&T treats new customers as me that well, they have a great client-friendly system in place to loan and prosper.

BB&T has recently been hit with downgrades from Moody's as well as a few brokerages, citing high exposure to real estate development portfolios in Virgina and the Carolinas, as well a deteriorating credit card asset quality. Well, join the crowd....

However, BB&T is cutting losses in land development, and I can unequivocally state that they are loaning to well qualified clients. They ask the right questions and expect honest answers that are checked, and checked again. BB&T is a recipient of TARP monies that have been put to good use acquiring smaller financial centers that fit BB&T's growth strategy and cleaning off the balance sheets as well as for loans. This is a bank that is on the "not fail" list if one is to follow the TARP trail.

Trading at a paltry $18.76/share, BB&T has a 52 week trading range of $18.43-46.31. The dividend is a hefty 10.71% but I assume that will be cut by 75% or more as Congress puts shareholders in the crapper, especially those having TARP or son of TARP funding. The PE is around 6.

BB&T is a well respected southern regional bank with a loyal client base. Employees I have dealt with are gracious, professional and want good business to occur. No morale problems here.

BB&T has both style and substance, and that is a prescription for success over the long haul for investors and clients alike.

Comments

[Walt17:]

My experience with BB&T was not that good. I recently went to a local branch to open an account. Though they did not seem busy, I had to wait to see a new account agent. When someone finally decided to talk to me, after a few minutes she told me she wasn't able to open new accounts. I had previously told them why I was there, which makes me wonder why the wrong person was directed to talk to me.

After a bit more waiting, I finally talked to a new accounts agent. She seemed to have only one thing on her mind. "How much money are you going to deposit with us?" After I told her about $60,000.00, her focus changed to "How soon can we get it?" When I asked questions, she couldn't answer them.

I never got a sense that BB&T was interested in providing a service. It was all about how much money I would give them. I left without opening the account. Based on my experience, BB&T is a second rate bank and merits the downgrade.

Jan 21 08:35 AM

[Ishortyou:]

the downgrade will trigger more problems to this bank, so they are walking on a thin line, god knows what is going to happen next.

Jan 21 08:39 AM

[Tik Tok:]

I am disappointed in this article. Regardless of one's personal experience with any particular business, that alone shouldn't be the basis for financial investment advice, especially by someone as broadly circulated as Mr. Smicklas. I expect fundamental analysis, probing of the business's financial picture. This is so critically important in an environment of toxic debt and failing financial institutions that it astounds me to read something like this as a pretense for investment analysis. Try again, please, and add something of value.

Jan 21 01:45 PM

[Pilm:]

I have to agree, you cannot base an investment decision on the reported experience of a single individual at a single bank branch. No matter how nice the employees are, it comes down to what is the bottom line in their quarterly reports that's going to determine if your investment is successful of not. I'm sure Countrywide employees were also pretty darn friendly to all those people they fleeced, but that bubble busted b/c they did not make good business decisions.

Jan 21 04:39 PM

[Thomas Smic...:]

Occasionally, I will submit in my blog a personal experience piece that brings a non-technical viewpoint to a security. I have mentioned BB&T favorably before - a good bet in a bad financial sector.

To those that find this shallow, I agree that extensive technical and detailed fundamental analysis is preferable. Personal experience can be useful - and, as Peter Lynch would attest, too rare in picking a stock for an appropriate portion of one's portfolios.

Jan 21 08:12 PM

[zeronimo:]

this article is disconnected from reality. it ignored statistics and put more emphasis on personal experience. the reality is that unemployment still rising and that will place an additional strain on struggling homeowners and will cause a further rise in foreclosures. Credit card defaults will also be higher. A reluctance to spend will generate fewer credit card fees. this reality is not good in the financial sector.

Jan 21 10:29 PM

[Tom FoolNC:]

Why do you think BB&T will be forced to cut their dividend, because they took TARP money? BBT did not need the money, but was stronly suggested by the regulators that they take it. BBT well knows that a majority of their individual investors count of the dividend. Yes, eah quarter BBT has had to raise their reserves, but in no way do I see them getting into deep trouble. I would be extremely surprised to see BBT cut their dividend. We'll see, earnings come out today.

Jan 22 09:09 AM

[Brown Trout:]

Rats!!! I have been a faithful BBT'er for years and I sincerely wish them to keep the dividend in tact.....I need the money to subsidize my income which has deteriated over the last several months and isn't getting any better....Mr King keep up the good track record and keep up the good record or I'll be needing some TARP assistance!....Brown Trout

Jan 22 10:41 AM

[helplessobs...:]

One of the worst worries for BBT, being a very solvent bank, is picking up the crap the FDIC will foist on it as it cleans up crummy insolvent banks. Another thing nobody seems to get straight. BANKS DO NOT LOAN OUT TARP FUNDS AS THEY ARE PUT IN THE BANKS CAPITAL ACCOUNT. Capital funds are bank loans and shareholder funds used to protect depositor's funds that ARE LENT OUT AS LOANS. When loan loss reserves are increased they come from the bank's capital accounts thus reducing shareholders equity.

Jan 25 03:09 PM

[volfanshan:]

Given the fact that they charge ridiculous fees for every day banking activities i'm sure they are financially stable. Our local BB&T will charge you $5.00 for cashing one of their own checks at their window if you don't have an account with them. BB&T = banking mafia

Jun 04 05:14 PM

[LovelyRorita:]

BB&T isn't the only bank that charges a check cashing fee. In fact Bank of America started this fee. You should probably do some research before you equate something to the mafia.

Another way to solve that problem is to take the check to your own bank. If you don't have a good enough relationship with your bank that they will not cash checks for you then that is your problem.


On Jun 04 05:14 PM volfanshan wrote:

> Given the fact that they charge ridiculous fees for every day banking
> activities i'm sure they are financially stable. Our local BB&T
> will charge you $5.00 for cashing one of their own checks at their
> window if you don't have an account with them. BB&T = banking
> mafia

Jul 28 12:46 PM