From Crain's Chicago Business
Why this out-of-town banker is bullish on Chicago
By Steve Daniels
It's not going to happen tomorrow, but Chicago's crowded banking market looks like it eventually might have to make room for another big player.
Winston-Salem, N.C.-based BB&T, the nation's 12th-largest bank by assets, has long-term designs on a retail entry into the Chicago market, according to CEO Kelly King.
BB&T already employs more than 100 in the Chicago area, with a group of business bankers and capital markets personnel here, as well as insurance brokerage CRC Insurance Services, which has a significant local presence. The bank also has workers doing commercial mortgages and financing insurance purchases for big companies.
King, in town recently to give a keynote address at the Federal Reserve Bank of Chicago, runs one of the nation's most acquisitive banks. BB&T is in the process of entering the Cincinnati market through a deal with a Kentucky bank, as well as mid-Atlantic markets north of its Southeast stronghold through a $2.5 billion deal for Lititz, Pa.-based Susquehanna Bancshares.
King said his ultimate goal is to serve Chicago and all of the eastern half of the U.S. excluding the Northeast. Even before the Kentucky and Pennsylvania deals, BB&T has retail operations in 15 states and $187 billion in assets.
"Over the long term we'll have a footprint that will run from Texas through the Midwest, topping out in Pennsylvania," he said in a recent interview.
'NOT THE NEAR TERM'
He makes clear, though, that BB&T isn't hunting for Chicago deals right now. “Over the long term, we will (be in Chicago), but not the near term,” he said.
But banks like BB&T that are aggressive acquirers don't always get to choose the timing of their market entries, he acknowledged.
Bank deals take a long time to percolate, he said. "We're already talking to people in this market that we like a lot," he said, declining to name names.
Bank observers long have pegged Chicago as overbanked and ripe for consolidation. Despite a couple of good-sized deals last year (MB Financial's purchase of Cole Taylor Bank's parent and U.S. Bank's acquisition of the Charter One franchise in Chicago), the long-predicted bank merger frenzy many forecast following the Great Recession has yet to materialize, surprising some in the industry.
Bankers often grumble about the intense competition for loans that reduces the interest they can charge, but out-of-state banks find the Chicago market enticing because, unlike many other markets, there isn't a single, dominant player.
BUT WHAT ABOUT THE DOWNSIDES?
King finds the Chicago market attractive and isn't scared off by the fiscal issues plaguing the state and city governments. He believes a coming resurgence in U.S. manufacturing, as well as trends favoring agriculture as other parts of the world see a growing demand for food, will serve the Midwest well.
Chicago, he said, "will be stronger in the next two decades than it has been in the last two decades."
And what about those terrible budget deficits at the state and local levels and multi-billion-dollar pension shortfalls?
"The fact that governments have challenges can subdue growth, but it can't stifle it," King said.
Not the best of quarters. I remember when BB&T consistently beat projections. Still think better days are ahead - especially if the Fed moves on rates. Have a feeling it may be later this year or early next due to the strong dollar that will only get stronger if rates rise. Stay tuned.
Just why is the Board Of Directors paying Kelly King and his executives so much and giving them so many other benefits? Today's miss on estimated earnings is just the lastest. This is now 3 missed earning estimates out of the last 5 according to Yahoo. It might be time for the shareholders to hold King, his executives staff and the Board of Directors to at least a somewhat little higher performance standard. Take a look at the pay of the above group for what I would say is at the least a sub-standard performance.
If you think interest rates will eventually start rising you should hold or even buy as margins will increase. This may take awhile so if you are not the patient kind I would recommend to sell.
He is not only overpaid he and his management team (which is way to many for political reasons) are INCOMPETENT.
It depends on how you define "over paid". When you work for an employer you want to make as much as possible. Now the problem is: How is KK's salary and benefits being arrived at? His benefits are derived at by the board of directors. Let us look at how KK got his job. He was appointed by the board and approved by the common share holders. Who is most influential at appointing members to the board? The CEO. This arrangement leave the door open for collusion. In MO this is a problem in every corporation. The CEO scratches the backs of the Board and the Board scratches the back of the CEO. Each providing excessive benefits to the other. I do believe that every CEO deserves a good salary and benefits, but not 500 to a 1000 times entry level employees. Much of this excessive money should be going into the pot to pay better dividends. This is just my opinion, but it is logical. There is no logical reason for any CEO to receive such benefits. Period. mo..
Reduce salary and benefits of upper echelon mgt and Board members and you can increase dividends more. Upper mgt of all corporations are over paid. mo
I totally agree with the postings here, but there is absolutely nothing a small shareholder can do. Management
controls the number of shares by their own holdings and by those held in their employees' retirement plans. Neither the big funds care for the small shareholder. Of course, this time the stock is tanking sooooo, maybe....Hope springs eternal.
The only way for shareholders to hold CEO accountable is to withhold voting for all members of BOD and back any shareholder activist group looking to replae BOD members. If enough small shareholders refuse to vote for current there will be an attempt to replace BOD by all shareholders in future. It is time for BOD to start looking out ffor shareholders and less for themselves and CEO!
Divvy increase to .27/sh/qtr announced today w/ up to $820 million in stock repurchase beginning in 3rd qtr. Thanks Mr. King & Board & to the employees that do all the heavy lifting & make this boat float.
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