BB&T: Financial Winner
The Federal Reserve released the minutes of its March 13 Open Market Committee meeting, and although the committee "revised up its forecast for inflation a bit compared with the projection prepared for the January FOMC meeting, reflecting recent data indicating higher paths for the prices of oil, other commodities, and imports," it said that the Fed's "staff continued to project that inflation would be subdued in 2012 and 2013."
The Federal Open Market Committee didn't change its language about the Fed's "highly accommodative stance for monetary policy," and expectations that economic conditions were "likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."
The Fed also seemed to downplay the prospects of another round of quantitative easing saying that only "a couple" of members would support additional stimulus under certain conditions.
The Commerce Department reported that during February, new orders for manufactured goods increased 1.3% from January, just behind the consensus estimate of a 1.4% increase, according to Briefing.com. The Commerce Department also said that factory shipments had increased for nine straight months, and were up 0.1% during February, to $462.6 billion.
The KBW Bank Index (I:BKX) was down slightly, to close at 49.90
BB&T's shares have now returned 27% year-to-date, following an 11% decline during 2011.
The shares trade for 1.9 times the company's reported Dec. 30 tangible book value of $16.73, and for 11 times the consensus 2013 earnings estimate of $2.89, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $2.51.
The company announced late Monday that it would redeem $94.75 million in trust preferred securities on May 2, for a total of $96.6 million, including premiums. Of that total, $46 million have an 8.9% coupon, $27.75 million had a 9% coupon, and $20 million had a coupon of 10.07%, so the redemption will save the company $8.6 million in divided payments, on an annual basis.
Following the completion of the Federal Reserve's 2012 bank holding company stress tests, BB&T on March 13 increased its quarterly dividend by four cents to 20 cents, and also said the regulator hadn't objected to "plans to redeem $3.2 billion of trust preferred securities beginning in 2012 without issuing any replacement capital." The shares now have a dividend yield of 2.52%.
Also on March 13, BB&T modified its deal to acquire BankAtlantic Bancorp's (BBX_) thrift subsidiary, agreeing to pay a premium of up to $316 million to acquire 78 South Florida branches, along $3.3 billion in deposits, while also agreeing to "assume BankAtlantic Bancorp's obligations with respect to its outstanding trust preferred securities, with an aggregate principal balance of approximately $285 million."