BB&T Bank: Worth a Look, Despite S&P's Credit Rating Downgrade

A while ago, I wrote a piece about my positive experience with BB&T Bank (BBT). BBT is a regional bank located primarily in the Southeast U.S. with a $9.7B market cap. The stock is trading at approximately $17.42/ share with a not-likely-to-be-sustained yield of 10.88%. The P/E is 6.4.

Yesterday, Standard and Poors put BBT on credit watch from neutral to negative, citing the potential for increasing losses in loan portfolios.That said, Standard and Poors mentioned that BB&T has not been hurt as significantly as other banks. Furthermore, BB&T was praised for recent adjustments in risk management and loan practices that may serve the institution well in the future. On the downside, BB&T is still not out of the woods and its credit rating will almost certainly be cut to negative if the bank tanks into the red.

My opinion of BB&T remains positive. Shortly after the S&P pronouncement towards the end of trading Tuesday, BB&T stock rose from $17.00 to $17.42/share on heavy volume. Perhaps some close observers of the banking sector are pouncing on this stock as a potential winner in the sector.

I expect the dividend to be cut somewhat by summer. I also expect BBT to continue refining business practices to consistently replicate what my experiences have been to date - exemplary loan and business banking services.

When I can reach an employee and receive service on a Sunday afternoon, be contacted by phone, e-mail and fax with data and term service by Monday and closure to financial requests on Tuesday, I am prone to be prejudiced in favor of this bank. Each employee I have dealt with has been gracious, thorough and on top of things.

Peter Lynch (Mr. Magellan) would probably bless BB&T in spite of the financial sector's overall uncertainty and recent run up if his experiences were like mine. Keep an eye on BB&T as a potential winner for the long term.

Comments

[User 338023]

I live in Houston TX. I began investing in lst VA Bankshares in l979 which subsequently was acquired by BBT. This is m y second comment - I have never lived in or visited N Carolina but I agree wholehearted with Mr Smicklas. Almost all of my BBT shares were purched with dividends (no significant investment from me). If I lived in N Carolina, I would certainly be a BBT customer rather than its big competitor Bank of America which I use in Texas not becauase they are good but they are convenient. However, other than 5 shares, I will never put another dolla in BAC. Wm Bruton

2009 Mar 18 07:18 PM

[helplessobserver]

CEO Kelly King is guiding BBT through the very difficult process of trying to get the most of the money back from construction, commercial and residential loans in Washington DC, Atlanta and Florida. None of these loans are sub-prime. Residential loans required 20% down or mortgage insurance. After this is all over the strongest bank in the SE will be BBT. BofA is a zombie with incompetent management and the stench of Wacovia has Wells Fargo execs gagging. I suspect BBT will eventually take over any good loans left on Wacovia's book.

2009 Mar 18 11:12 PM