With 2012 squarely in the rearview mirror, it's a perfect time to see how some favorite financial stocks fared throughout the year. While past performance does not indicate future results, looking at recent successes and failures can be a good place to start as you build you investment thesis.
Today, I'm going to look at BB&T (BBT +0.15%), a favorite regional bank that is also the 16th largest bank in the country. The North Carolina-based bank operates more than 1,800 branches and 2,400 ATMs across 12 states. Here is a quick look at some important stats.
|
2012 Stock Return |
13.5% |
|
Market Cap |
$20.9 billion |
|
Total Assets |
$182.0 billion |
|
Price-to-Earnings Ratio |
11.7 |
|
Price-to-Book Value |
1.12 |
|
Dividend Yield |
2.7% |
|
Banks of similar size |
SunTrust Banks (STI +0.00%) |
Source: Yahoo! Finance. Total assets as of quarter ending September 2012
The year in review
When the year kicked off, our own Matt Koppenheffer nominated BB&T as a bank to ring in the new year. Investors who followed his advice would have been rewarded with a return north of 13% for the year. The bank was buoyed in March, when it passed the Federal Reserve stress test, which simulated how the banks would perform should the country face another financial crisis. BB&T was among the best performers of those tested, checking in with the sixth highest capital ratio. Following the stress test results, BB&T wasted little time before it decided to boost its dividend, quickly announcing a 25% increase to $0.20 per share.
BB&T is also among the regional banks stepping up mortgage lending, taking advantage of low interest rates -- and the large spread that comes with them -- to boost earnings throughout the year.
We'll know more for sure when the bank reports full-year earnings in a few weeks, but if results through the third quarter are any indicator, investors could expect a similar 2013. Nonperforming loans were under 1.4% of total assets, and the Tier 1 capital ratio was just under 11%. By keeping close to its community banking routes, the bank's leadership team has managed to make BB&T among the better performers among regional banks.
What it all means
Last year was fairly nondescript for the Mid-Atlantic bank, which is usually a good thing when it comes to large banks. The lack of major news during the year reiterates why BB&T remains a favorite among many investors. I think it's one of the best options in banking out there, but you don't have to take my word for it.
