This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

BB&T's Allison: A Free Market Could Have Prevented This

Some observers are concerned about BB&T's large commercial loan exposure, as signs of cracks in the commercial market are beginning to show. The company set aside an additional $528 million in the fourth quarter for loan losses, compared to $184 million a year earlier.

"In 2009, the next big problem for banks, including BB&T, is commercial loans and how that plays out," says Tom Hepner, an investment advisor at Ruggie Wealth Management, which does not own BB&T shares. "With concentration in these they are probably going to show some exposures to loans that were approved in a very dynamic growing period."

Kevin Fitzsimmons, an analyst at Sandler O'Neill & Partners, also maintains a sell rating on BB&T, due to the general residential housing malaise, despite his fondness for the company and Allison.

A Reluctant TARP Recipient

Allison has been vehemently opposed to the Treasury's Capital Purchase Program, in which the government has bought preferred equity stakes in banks, but the company ultimately participated under pressure from regulators. BB&T also believed that the public perception of rejecting the government's aid would be that something was wrong with the company, he says.

BB&T received $3.1 billion in TARP fund in the fourth quarter. The company says it will use the capital to expand its lending business, but the challenge is making "good loans," Allison says. Congress has been critical of the banks for "hoarding" the money or using it to acquire troubled institutions.

"This is a tough environment to make good loans because the people you would like to lend money to unfortunately don't want to borrow it because they're scared," he says. Still, BB&T is "picking up a lot of business -- a lot of clients that had long-term relationships with ... competitors," he continues. "So in that sense it's actually been good for us."
4 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $17.48 0.00%
BBT $38.66 0.00%
C $54.21 0.00%
JPM $67.17 0.00%
WFC $55.39 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs