In expansive mood, BB&T spreads name

Growth: A North Carolina banking company has become the nation's 21st largest by buying up smaller ones, including several in Maryland.

November 07, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

When John A. Allison was a young banker, he made a loan to a man who ran a large hog farm that he thought was a sure bet.

But one day, the farmer showed up at the bank, pulled out a large ring of keys and announced, "The hogs eat at 5."

Then the farmer turned and walked out before a stunned Allison could even respond.

"That was one of those wake-up calls," said Allison.

The bank lost about half a million dollars on the loan, but Allison learned two important lessons: Never make a loan that is backed by collateral that eats. And make sure you know the borrower.

It has been useful information for Allison to remember while his career took him from loan officer to chairman and chief executive officer of BB&T Corp. of Winston-Salem, N.C.

But for the 51-year-old banker and BB&T, painful lessons have been few, even as the company has expanded rapidly into the District of Columbia and seven states, including Maryland.

Since Allison was named chairman and chief executive officer 10 years ago, BB&T has surprised competitors and analysts by transforming itself from a virtual unknown to the country's 21st largest banking company.

Assets have soared to $41.6 billion, up from $5 billion over the past 10 years; branches have tripled to 622 and include six states and the District of Columbia; and profit has climbed to $469 million in the first nine months of the year, compared with $53.6 million at the end of 1990.

"The numbers are really quite extraordinary," said Nancy Bush, co-director of research at Ryan Beck & Co. in Livingston, N.J. "I think a lot of the company, and I think a lot of John Allison. The company is one of the more innovative and dynamic."

What has impressed many analysts is BB&T's voracious appetite for deals. Since 1990, it has acquired 42 community banks and savings and loans -- two in Maryland -- 32 insurance agencies, and 12 nonbank financial-services companies, ranging from a software development business to an investment banking house.

"They have been a great acquirer," said Christopher W. Marinac, a banking analyst at Robinson-Humphrey Co., an Atlanta investment banking business. "They have been able to acquire and integrate seamlessly. They have an impeccable track record."

BB&T has pushed into Maryland over the last two years by acquiring Maryland Federal Bancorp of Hyattsville last year and Mason-Dixon Bancshares of Westminster last July.

The deals have given BB&T a foothold in Maryland with $2.1 billion in assets. The acquisitions, though small, haven't gone unnoticed.

"They are a good outfit," said Hunter R. Hollar, president and chief executive officer of Sandy Spring Bancorp in Olney. "They don't have the critical mass here in this market yet to be a significant player. If they are successful in getting some additional mass, they will be a tough competitor."

Allison expects to add $3 billion in assets in Maryland over the next three to five years.

"Long term, we would certainly like to be downtown, but if we can't get downtown we will develop around Baltimore," he said. "There are still several community banks that have nice operations that we would love to join with. We do think that the forces of consolidation are very strong."

When BB&T expands, it picks markets with potential for growth.

"When you look at the economic statistics of Washington, D.C., and the Baltimore market, we thought we had an excellent kind of market for our kind of banking."

Typically, BB&T's goal is to be among the top five largest banks when it enters a new market.

"We would hope to do that in Maryland," Allison said.

BB&T already has the largest share of the Carroll County market after its acquisition of Mason-Dixon. "That is as important to me as being fifth in Maryland," he said. "Efficiencies are largely driven around local markets."

On the surface, BB&T looks like any other of the giant banks that have plowed into Maryland and other parts of the country. It is headquartered in North Carolina, like Bank of America Corp., First Union Corp., and Wachovia Corp.; it is a formidable competitor, and it is growing rapidly.

But BB&T is different, analysts say. Instead of making splashy, multibillion-dollar acquisitions, it moves into markets where the giants already are, and buys small, community banks. It then works to sweep up disgruntled big bank customers by offering many of the same products with friendlier service.

BB&T's acquisitions are never hostile and usually result in far fewer employees losing jobs, analysts said.

"They don't take the slash and burn approach," said David West, a banking analyst at Davenport & Co. in Richmond, Va. "They try to be humane about it."

When BB&T bought Maryland Federal, about 60 people, mainly in accounting and data processing, lost their jobs out of about 300 employees, said Robert Halleck, the former head of the company, who is president of the Maryland south region of BB&T.

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