Apr. 21, 2014, 7:30 AM
- Noting a weak quarter driven by lower fee income thanks to slowing mortgage activity, as well as continued pressure on net interest margins, Compass Point's Kevin Barker nevertheless reiterates his Buy rating on BB& T (BBT), though lowering the price target by $1 to $42.
- Among positives still remaining: Further expense declines to come (management reiterated pledge to boost operating efficiency), and a pickup in loan activity in Q2. "The outlook for loan growth is improving and BB&T is prudently managing its expense base."
Apr. 17, 2014, 6:50 AM
- Net interest income of $1.383B fell from $1.459B one year ago, with NIM of 3.52% falling 24 basis points. The average yield on the loan portfolio of 4.58% is off 45 bps amid the runoff of higher-yielding covered loans and the sale of a consumer lending subsidiary in Q4.
- Noninterest income of $911M fell from $1.001B a year ago as mortgage banking income fell $106M. Provision for credit losses fell $180M, or 72.9%. Net charge-offs fell $119M, or 43.3%. The reserve release of $80M compared to $54M one year ago.
- Noninterest expense of $1.4B fell 0.8% from a year ago, mostly driven by $35M lower personnel expense; it fell by an annualized 15% from Q4 "driven by substantially lower personnel costs and professional services expenses ... We continue to expect improvement in the efficiency ratio as revenue growth is expected to outpace expense growth."
- Basel III common equity Tier 1 capital ratio of 9.5% up from 9.3% at the end of 2013.
- Q1 results, press release
- BBT no trades premarket
Apr. 17, 2014, 5:47 AM| Comment!
Apr. 17, 2014, 12:05 AM
Apr. 16, 2014, 5:30 PM
Apr. 3, 2014, 10:41 AM
- Add another to list of banks being downgraded in the wake of mostly conservative capital returns, and just ahead of what are expected to be sluggish Q1 earnings reports: BB&T (BBT -0.5%) is cut to Outperform from Strong Buy at Raymond James.
- Previously: U.S. Bancorp pulled from Conviction Buy list at Goldman, and Citi and Deutsche also receive downgrades.
- KBE -0.4%, KRE -0.6%
- Related ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAI, IAT, SEF, IYG, FXO, PFI, KBWB, FNCL, RKH, QABA, FINU, KRU, RWW, KBWR, RYF, PSCF, KRS, FINZ, AIRR
Mar. 26, 2014, 4:32 PM
- Announcing approval from the Fed of its capital return plan, BB&T (BBT) says to look for a "conservative" boost to its quarterly dividend. No plans to repurchase shares are mentioned. The bank expects to make a more specific announcement at the board's next scheduled meeting on April 29.
- Shares -0.5% AH
- Press release
- Full CCAR results
- Previous coverage
Mar. 20, 2014, 5:07 PM
- Again, all 30 lenders subject to the Fed stress test passed with the exception of Zions Bancorp. Checking the individual results:
- Regional banks passing: BB&T Corp. (BBT), Comerica (CMA), Fifth Third (FITB), Huntington (HBAN), KeyCorp (KEY), M&T (MTB), PNC, Regions (RF), SunTrust (STI), U.S. Bancorp (USB).
- Credit card lenders: American Express (AXP), Discover (see here), Capital One (COF).
- Those controlled by overseas holding companies: BBVA Compass, BMO FInancial, HSBC North America, RBS Citizens Financial, Santander Holdings USA (SAN), UnionBanCal (MTU).
- Trust banks: Bank of New York (BK), State Street (STT), Northern Trust (NTRS).
- TBTFs: See here.
- More on Zions (ZION): The failure likely has something to do with CDOs on its books backed by trust-preferred securities. The bank signaled earlier this year it would likely resubmit its capital plan to the Fed as the test's calculation of its capital ratio wouldn't reflect Zion's planned sale of these.
Mar. 20, 2014, 10:54 AM
- Much of the financial sector is lit up bright green, continuing to outperform following yesterday's suggestion by the FOMC and Janet Yellen that rate hikes could come sooner than expected. XLF +1.1%, KBE +1.6%, KRE +1.6%.
- At new 52-week or even multi-year highs are JPMorgan (JPM +2.3%), Wells Fargo (WFC +1.7%), Morgan Stanley (MS +1.4%), and Bank of America (BAC +1.6%).
- Regional lenders: U.S. Bancorp (USB +1%), Huntington (HBAN +1.5%), PNC (PNC +1.3%), BB&T (BBT +1.5%), Fifth Third (FITB +1.8%), First Niagara (FNFG +2.1%).
- Leading among the life insurers are Lincoln National (LNC +1.9%), Protective Life (PL +1.6%), Manulife (MFC +1.2%), and Sun Life (SLF +1.1%).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, KIE, IAT, SEF, IYG, IAK, FXO, PFI, KBWB, RKH, QABA, FNCL, FINU, KRU, RWW, KBWR, RYF, PSCF, KBWI, KBWP, KRS, FINZ
Mar. 17, 2014, 10:57 AM
- "We maintain our contention that as the tailwind of credit improvement subsides, banks must renew their focus on core profitability to compensate for the persistent low interest rate environment, increased regulations and modest loan growth," writes RBC Capital, trying to say the easy money's been made for banks and now those with the strongest managements will be the ones to prosper going forward.
- No surprise, an RBC survey finds Wells Fargo (WFC +1%) and U.S. Bancorp (USB +0.8%) as the best-managed banks (defining this by ROA and ROTCE), with Capital One (COF +1.4%) ranking high as well. The team comes up with a list of seven "up and comers" perhaps poised to join the ranks of "best managed":
- BB&T (BBT +0.5%), Huntington Bancshares (HBAN +0.9%), Fifth Third (FITB +0.7%), JPMorgan (JPM +0.9%), M&T Bank (MTB), PNC Financial (PNC +1%), and SunTrust (STI +0.7%).
Feb. 25, 2014, 12:59 PM
- With bank capital levels really no longer in question, don't expect any big pops in the banks surrounding the stress tests and CCAR results, says Citi in its "2014 CCAR Playbook." If anything - given that the stress tests are supposedly tougher this year - the risk to banks could be on the downside.
- The team expects the stress test results - which looks at bank balance sheets under different scenarios - sometime around March 7 and the CCAR results - on which the Fed approves/disapproves capital return plans - about a week later.
- Look for modestly higher average gross payout ratios of 62% vs. 55% last year. Individual banks: BAC 11% dividend (payout ratio) + 32% buyback for 43%; BBT 33% dividend +19% buyback; FITB 32% dividend + 37% buyback; JPM 27% dividend + 18% buyback; WFC 28% dividend + 43% buyback; GS 14% dividend + 78% buyback for an industry-leading payout ratio of 91%; MTB 34% dividend + 0% buyback; MS 17% dividend + 36% buyback; PNC 31% dividend + 49% buyback; USB 30% dividend +46% buyback.
- Related ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAI, IAT, SEF, IYG, FXO, PFI, KBWB, RKH, QABA, FINU, FNCL, KCE, KRU, RWW, KBWR, RYF, PSCF, KRS, FINZ, KBWC
Feb. 20, 2014, 3:29 PM
- Expecting dividends to grow 49% on average for the banks subject to the Fed's stress tests (about the same as last year), Markit, says Citigroup (C) and Bank of America (BAC) will lead the way with 400% boosts. "They are the last of the major banks paying minimal dividends ... change is overdue."
- While 400% is a big number, Citi and BofA will continue to lag their peers in terms of yield (400% growth on a penny just leads to a nickel).
- Also expected to have a significant pop is Morgan Stanley (MS) - a doubling of the payout to $0.10 per share and a 1.4% yield. Others in the top 5 in increases are Zions Bancorp (ZION) with a 75% boost to $0.07 and Regions Financial (RF) up 67% to $0.05.
- The others: KEY +27%, HBAN +20%, BK +20%, STI +20%, COF +17%, DFS +15%, AXP +13%, STT +12%, JPM +11%, CMA +11%, PNC +9%, USB +9%, GS +9%, FITB +8%, WFC +7%, NTRS +6%, and no soup for BBT and MTB where the dividends are expected to be flat at $0.23 and $0.70 per share, respectively.
- As for ETFs, the dividend jumps are expected to have the biggest impact on the XLF which would see a 25% increase in payout: The ETF has 81 companies, but the top 5 holdings - BofA, Wells, JPM, Citi, USB - make up 41% of assets. In contrast, just two CCAR banks make up the top five holdings of the KBE and it should see a more muted increase of just 18%.
- Related ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, PFI, KBWB, RKH, QABA, FNCL, FINU, KRU, RWW, KBWR, RYF, PSCF, KRS, FINZ
Jan. 28, 2014, 1:50 PM
Jan. 17, 2014, 8:53 AM| Comment!
Jan. 16, 2014, 7:43 AM
- Net interest income of $1.4B falls from $1.45B in Q3 and $1.5B a year ago. Net interest margin of 3.56% is off 12 bps from Q3 and 28 bps from a year ago.
- Noninterest income of $985M slips from $1.02B a year ago, with mortgage banking income off $131M. Credit loss provisions fell $185M, or 72.3% from a year ago. Net charge offs fell $154M. The reserve release of $70M compared to $39M a year ago.
- Noninterest expenses of $1.5B fell 2.2% Y/Y thanks to a big drop in foreclosed property expenses.
- Q4 results, press release
- BBT shares flat premarket.
Jan. 16, 2014, 6:20 AM
BBT vs. ETF Alternatives
BB&T Corporation is a financial holding company, which through its subsidiary, Branch Banking and Trust Company provides a range of banking services to individuals and businesses, and offers loans to businesses and consumers.
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