BB&T Enjoys Tranquil Shareholders Meeting

By | April 25, 2012

(Source: Richard Craver Winston-Salem Journal, N.C. (MCT) — BBandT Corp. reaped at Tuesday’s annual shareholders meeting what it has sown during the financial crisis — tranquility reflecting confidence in its conservative, profitable strategy.

Unlike Wells Fargo and Co.’s shareholders meeting Tuesday, which required a police presence to handle Occupy Wall Street protesters, BBandT’s meeting featured no overt criticism of management.

Kelly King, BBandT’s chairman and chief executive, fielded two innocuous questions following his 50-minute presentation on the bank’s financial strength.

“I believe the lack of criticism is an affirmation of our efforts,” King said.

King said — and analysts agree — that BBandT has managed the financial crisis as well as any large regional bank. BBandT has had 21 consecutive profitable quarters, matched only by US Bancorp and MandT Bank.

As if on cue, BBandT’s share price hit another 52-week high Tuesday, climbing to $32 before closing up 31 cents to $31.95.

“We’re not where we want to be with earnings, but they are coming back strongly, and the gap is getting wider with our peers,” King said.

For fiscal 2011, BBandT had net income of $1.29 billion, up 58 percent.

The quiet meeting doesn’t mean King lacks for shareholder concerns or regulatory and legal challenges.

During his presentation, King addressed what is perhaps shareholders’ biggest question: When will BBandT raise its dividend again?

BBandT raised its dividend by 4 cents to 20 cents on March 13, acting soon after getting the thumbs-up from the Federal Reserve on its capital plans.

Still, the dividend remains significantly below the 47 cents BBandT paid before the financial crisis began in late 2007.

King said BBandT expects the Fed to continue to restrict how and when banks can raise their dividend — essentially requiring them to pass annual economic stress tests.

“I want shareholders to know it is my personal priority to raise our dividend as part of returning shareholder value,” King said.

However, King also said raising the dividend remains second behind growing the bank in terms of strategic importance.

He cited the recently completed $570 million deal for the life, property and casualty insurance divisions of Crump Group Inc. as an example of prudent spending of capital. The group will add $300 million in annual revenue.

David George, an analyst with Baird and Co. Inc., said BBandT’s strategy of diversifying its revenue stream will help it maintain profitability and market-share growth.

“From our perspective, increasing its revenue contribution from fees should result in more consistent revenue trends going forward, as fees are typically less cyclical than spread revenues,” George said.

“Strategic growth priorities for the company include building out its capital markets capabilities, specialty lending and its insurance businesses.”

King expressed confidence that BBandT will close its purchase of BankAtlantic in the second quarter and complete the integration of its 78 branches by Sept. 30.

That’s despite the bank facing another lawsuit trying to block the deal. The lawsuit says the $301 million transaction undervalues BankAtlantic Bancorp shares while BankAtlantic executives receive lucrative severance and noncompete packages.

The deal has received approval from the U.S. Office of the Comptroller of the Currency and N.C. Office of the Commissioner of Banks. BBandT is awaiting approval from the Federal Reserve and Federal Deposit Insurance Corp.

BBandT’s bid to buy Bank-Atlantic hit a roadblock Feb. 26, following a ruling by a Delaware chancery judge who said the deal would violate the terms of BankAtlantic’s trust-preferred securities debt.

On March 10, BBandT decided that gaining the No. 6 market share in the Miami market was worth taking on more calculated risk. It agreed to modify its deal by assuming responsibility for $285 million of BankAtlantic’s outstanding trust-preferred securities.

“It is very unlikely the deal will be stalled” by the second lawsuit, King said.

King said the company is adding hundreds of jobs, including locally, because of increasing requirements from Dodd-Frank regulation.

King said that although the regulatory requirements continue to act as an “enormous drag on our business and industry, we will fight through it and will do a better job with it than others.”


©2012 Winston-Salem Journal (Winston Salem, N.C.)

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Source: Richard Craver Winston-Salem Journal, N.C. (MCT)

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