BB&T CEO Looks at Many Deals, But Likes Very Few

BB&T Corp. is ready to get back into bank acquisitions, though the company is willing to say no frequently and often.

Kelly King, BB&T's chairman and CEO, was asked during a quarterly conference call Thursday to discuss developments surrounding its deal for BankAtlantic, reports that it had bid on BankUnited Inc. and the overall state of M&A. Though he said little about specific companies, he sought to reaffirm that BB&T has no interest of returning to the serial acquirer that it was roughly a decade ago.

"Because of the last several years, we got out of the [M&A] business because the returns were too low," King said. That hasn't stopped the Winston-Salem, N.C., company from considering a number of financial institutions in recent years.

"We are very what I call aggressive in terms of looking at opportunities, but very conservative when we get down to doing the analysis," King said. "We look at a lot of stuff. We don't do much and that is because we are very conservative. We are very disciplined. We are very analytical."

King's declared his philosophy on the same day published reports said that BankUnited's private shareholders wanted a price above $30 a share. That price would have been a 30% premium above the Miami Lakes, Fla., company's closing price on Jan. 12, a day before word of a possible sale began to spread.

King did not comment on BankUnited directly.

However, he acknowledged that BB&T was aware of a lawsuit filed by the Securities and Exchange Commission against BankAtlantic Bancorp. King, however, would not give an opinion of the lawsuit, which accuses BankAtlantic and its chairman of misleading investors.

"It in no way involves BB&T," King said in response to an analyst's question. "As far as we're concerned, we're proceeding in terms of our pre-acquisition conversion activities. We're proceeding in terms of regulatory applications. It is our wish and our expectation to perform according to our contract."

King spent considerable time touting efforts to generate organic growth, including the addition of new branches and last year's creation of an energy team in BB&T's corporate bank. The energy team has so far originated 28 new client relationships, the company said.

"We have invested in organic opportunities over the last long number of years in places like Florida and Maryland and Texas," King said. "We do that on a very consistent and strategic basis so that we are constantly layering in organic growth opportunities, and that is why you want to deploy capital in that way. That is obviously the most profitable way to enhance shareholder value."

BB&T produced another profitable quarter, though the results were slightly below analysts' expectations. Earnings rose 88% from a year earlier, to $391 million.

The $171.5 billion-asset company accelerated plans to dispose of problematic assets, reducing other real estate owned by 44% from a quarter earlier. BB&T partially offset elevated costs from selling those assets with $103 million in securities gains during the fourth quarter.

Insurance income also edged up 2% from a year earlier, to $254 million, after the company completed acquisitions of three small firms during the fourth quarter. "Acquisitions are beginning to come back" in insurance, King said.

"We really went through a year and a half or so where there wasn't much going on," he added. "I think everybody was kind of shell-shocked and kind of trying to figure out what was going on in the world. … We think we will continue to see opportunities in property-casualty and in benefits as we go forward. And we think our insurance acquisition activity will be what I would call normal for BB&T, which is a number of acquisitions during the course of the year."