Thursday, Credit Suisse initiated coverage of BB&T Corp. (BBT) stock with an Underperform rating and a price target of $15. The brokerage established its 2009 EPS estimate of $0.46, and its 2010 estimate of $0.13.
Analyst Siegenthaler noted that BBT's problem loan levels remain in-line with peers, but fare significantly better than its southeastern peers. Credit losses have actually trended better than the industry, which likely implies stronger underwriting standards at BBT, while the analyst also believes higher fair value assumptions are partly a driver of lower charge-offs.
While the recent capital-related headlines have provided investors with positive news, the analyst is more cautious on the company's underlying construction portfolio which consists of a 6% / 5% loan allocated to residential construction / commercial real estate construction loans in North Carolina, Georgia, Virginia, and Florida.
Additionally, the analyst said that BBT has also made loans through its commercial & industrial (C&I) channel to the homebuilders, while this value is not disclosed through the GAAP disclosures (he uses statutory data in our burn-down analysis).
Specifically, the analyst is cautious on the stock because of his assumption that nearly half the credit losses over the next two years will come from the company's construction loan portfolio, and while the dividend has already been reduced, he is worried about the potential impact to capital levels from an increase in construction-related charge-offs.
Currently, BBT is down $1.01 or 4.65% and trading at $20.71.
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.