Summary
BB&T management has made it clear that its growth plans are centered around organic growth, driven by ongoing investment and innovation in tech-driven services and automation.
Regulatory changes should be positive for BB&T, reducing its capital requirements and giving the bank more flexibility regarding loan growth and capital returns.
A low-to-mid single-digit long-term growth rate still supports a fair value in the low $50's, making this a quality hold.
In a relatively short of period of time, both the operating environment and operating philosophy of BB&T (BBT) seem to have changed in meaningful ways. Management has now gone out of its way to make clear that its priorities lie with organic, tech investment-driven growth versus M&A, while the regulatory environment seems to be moving in a direction that will allow BB&T to run a leaner, higher-yielding balance sheet.
While not all of BB&T’s recent updates were universally positive, and my fair value is not really changing at this time, all told I believe BB&T is on a good path. Although I do still believe that there are a few more deals in BB&T’s future, I can’t argue with a management strategic that is focused on being leaner and more responsive while exploiting the bank’s existing specialty capabilities.
