BBT Looks Strong But Questions Remain – US-FOREX.US
BB&T is expected to announce a strong second quarter Friday, but Wall Street isn’t convinced its credit losses are as clean the regional bank’s books suggest.”BB&T
will probably report a decent quarter tomorrow,” said FBR Capital Markets analyst Paul Miller, who expects earnings of 17 cents per share. “I wouldn’t be completely shocked if they reach the 20-range, which could happen if they get meaningful margin expansion.” Wall Street, on average, is expecting earnings of 28 cents per share, according to Thomson Reuters.BB&T has a solid franchise, and appears to have done a great job at keeping losses low. Paul Miller is skeptical though, and expects its credit losses will catch up with normal levels. It would be difficult for a retail lender like BB&T to avoid industry-wide problems related to consumer loans and rising national unemployment levels. In a recent report, Miller warned of exposure that includes 7.5 billion in residential acquisition, development and construction loans. “We are also concerned about management’s guidance for losses to improve in the second half of 2009,” Miller said, “and believe that losses in Atlanta, specifically, will be more material than management expects.”Since the beginning of the year, BB&T shares have lost 18.7% of their value, while competitors such as SunTrust Banks
and Regions Financial
have tumbled 42.9% and 47.0%. On a whole, the regional banking sector has fallen 35.2%, as measured by the SPDR KBW Regional Banking
exchange-traded fund.
Goldman Sachs
and JPMorgan Chase
have reported banner quarterly reports, but details offer a more complicated picture. For example, at JPMorgan, loans fell and deposits dropped from the previous quarter, meanwhile the pace of non-performing loans appeared to increase. CIT Group
, a major small- and medium-size lender, meanwhile is close to filing bankruptcy protection.