BB&T Corporation (BBT), JPMorgan Chase & Co. (JPM): This Great Bank Needs To Focus on Its Strengths

Page 1 of 2

Sometimes banking is made more complicated than it needs to be. A successful bank can attract deposits, make loans, manage its credit quality, and be an excellent investment. While it’s true that this business plan isn’t very exciting, if there is one thing that is not needed in banking it’s excitement. Usually when people get excited about a bank it means something bad happened. Unfortunately, one of my favorite banks, BB&T Corporation (NYSE:BBT) seems to be losing focus of what is important.

BB&T Corporation (NYSE:BBT)Why BB&T?

Before we look at what BB&T Corporation (NYSE:BBT) is doing well, and what they can do better, maybe the question should be asked, why BB&T Corporation (NYSE:BBT) at all? The quick answer is, BB&T Corporation (NYSE:BBT) has consistently outperformed its peers by multiple measures over the last few years. They are a traditional bank, in the sense that they don’t do huge debt offerings overseas, they didn’t get into the sub-prime lending mess, and they stick to banking, insurance, and investments.

BB&T Corporation (NYSE:BBT)’s peers include the very big banks like JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Co (NYSE:WFC), and U.S. Bancorp (NYSE:USB). Each of these companies are looking to build out their branch network. These companies would love to capture more business in the Southeastern part of the U.S., where BB&T Corporation (NYSE:BBT) has a significant presence. These competitors also have something else in common, they are generally well-respected institutions and are well know to investors. BB&T on the other hand, is a very big bank that few people seem to pay attention to. When companies are ignored, there usually is opportunity.

What do they do well?

The main strength of BB&T’s operation is their Community Banking business. This division is comprised of the bank’s branch network, including their retail and business lenders. BB&T generated 42.83% of their net income from Community Banking in the current quarter.

While it makes sense on the surface for BB&T to try and expand their insurance and investment operations to provide revenue diversity, I would prefer the bank stick to what it does best. BB&T is a deposit and loan growth machine. In the current quarter, BB&T grew average deposits by 4.7% and average loans by 5.3%. While it’s true that BB&T’s peers grew overall deposits faster, the quality of BB&T’s deposit growth was unmatched.

Looking at BB&T’s peers, U.S. Bancorp (NYSE:USB) and JPMorgan Chase & Co. (NYSE:JPM) posted 7.3% and 7% total deposit growth. By comparison, Wells Fargo & Co (NYSE:WFC) saw total deposits increase by 6.36%. However, most of BB&T’s competition saw savings and money market accounts grow faster than non-interest bearing accounts. BB&T, on the other hand, reported an almost 15% increase in total checking accounts, and an over 24% increase in non-interest bearing accounts.

Not surprisingly, BB&T’s net interest margin leads their peers at 3.78%. By comparison, U.S. Bancorp and Wells Fargo & Co (NYSE:WFC)’s net interest margin is 3.48%, and JPMorgan Chase & Co. (NYSE:JPM)’s margin is much lower at 2.36%. If BB&T continues to grow non-interest bearing accounts at a rate faster than overall deposits, their margin should continue to outperform their peers in the future.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!