BB&T Corp. (BBT): Beauty Without the Beast?

November 23, 2009 11:29 AM EST
BB&T Corp. (NYSE: BBT), the Winston-Salem based banking operation, has been slowly building its reserves across the mid-Atlantic and Southeast, becoming a formidable player in the banking industry, a Barron's article reports. The bank now has assets of about $165 billion and a market capitalization of $17 billion.

YTD shows BB&T down about 5%, which is significantly better than KBW Regional Banking Indexes drop of 28%.

One area of concern for the bank is their commercial real-estate portfolio. The portfolio makes up about 17% of the bank's $107 billion book of loans and leases. The largest foreclosure that the bank has seen was $19 million, not terribly large in the real-estate arena. Overall, the bank has about $1.3 billion of foreclosures since September 30, 2009.

The bank also reduced their dividend about 68% to $0.15, from $0.47 previously, yielding about 2.4% annually.

Finally, BB&T has net loan charge-offs of only 1.71%, lower than SunTrust's (NYSE: STI) 3.33% and Regions Financial's (NYSE: RF) 2.86%.

The Street consensus is an EPS of $0.22 and revs of $2.23 billion for the Q409 (current). If you look ahead to FY10, the consensus is for an EPS of $1.51 and $9.02 billion of revs, up from the $8.7 billion estimated for FY09. BB&T topped estimates for Q309 by $0.02, and recently (August) acquired ops and deposits of Colonial Bank totaling $42 billion, split into $20 billion of deposits and $22 billion of assets.

Because it is well positioned, having healthy mortgage banking and insurance brokerages, BB&T could very well see upside of 30% or more upon the recovery of the economy. This is a banking stock you might want to keep your eye on. And tuck your shirt in, for Pete's sake.

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