siegfried

Financial Stocks: A Look at the Big Picture

As of 12/31/05 BBT had $11.94 billion in construction and land development loans. As of 12/31/07 BBT had $19.47 billion. The $7.53 billion in construction and land development loans underwritten in the last 2 years represent commercial and residential construction projects underwritten during the boom years of real estate expansion and are now being finished--just in time for the biggest contraction in real estate values since BBT was created. This portfolio of construction loans is now turning into devalued real estate assets. This means the $7.53 billion might be a 50% write off in 2008. Current loss reserves for BBT are slightly over $1 billion. These construction loans are the bomb that could sink BBT just as sure as sub prime mortgages sank Bear Stearns. Don't say you weren't warned.

3 Reasons To Be Bullish on the Investment Banks

What's to keep the investment banks from creating more ABS and sell them to the Fed at par? It seems like the Fed is guaranteeing profits, isn't it?

Financial Stocks: A Look at the Big Picture

BBT has 21.24% or $19.5 billion of its loan portfolio in construction loans. This is 153% of shareholder's equity, which by the way has a bunch of goodwill in it. As of 12/31/07 BBT had $3.3 billion of Alt A loans. BBT's loss reserve as percentage of its loan portfolio was 1.11%. Does valuation even matter any more?