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  • oneyoungdoctor oneyoungdoctor May 6, 2004 7:03 PM Flag

    shareholder meeting

    2nd part of article on my next post Artlcle to large for one post.



    EXCLUSIVE REPORTS
    From the April 30, 2004 print edition
    Critics take swipes at BB&T's earnings, governance policies
    Paul Davis
    The Business Journal Serving the Greater Triad Area
    WINSTON-SALEM -- BB&T Corp., already battling a stagnant stock price and what it calls a 15-month performance "blip," is now facing a corporate-governance challenge from the nation's largest public pension fund in addition to calls from analysts to take more aggressive steps to improve the bank's bottom line.

    In the past week, BB&T has been criticized openly by the California Public Employees' Retirement System, or Calpers, for allowing auditor PricewaterhouseCoopers to perform nonauditing tasks such as tax planning and providing tax advice.

    Calpers said it would withhold support to re-elect committee members to BB&T's board of directors, a position the fund is taking with several companies including Wachovia and Citigroup.

    Calpers' efforts, though unsuccessful at BB&T's annual meeting this week, still demonstrate that more challenges are building around BB&T and that some groups want changes made at the bank.

    Several analysts, meanwhile, say the bank must take more aggressive action to improve performance and return to the blue-chip reputation it enjoyed just two years ago.

    Last year, BB&T earnings totaled $1.1 billion, down 21 percent from prior-year levels. In the first quarter of 2004, BB&T saw net income of $328.5 million, up slightly from the prior year.

    "They need to find efficiencies in their organization," said Jason Goldberg, an analyst at Lehman Brothers in New York. "They had been doing a lot of deals and were never fully getting their culture engrained (at purchased banks). They need to regroup."

    Various options suggested
    Those who follow the banking industry have a variety of suggestions for BB&T.

    Tony Plath, banking professor at UNC-Charlotte, is among those offering the most ambitious proposal, suggesting that BB&T scrap its community-banking model. The model has more than 20 regions, and it is designed to push decision-making authority out into the bank's branches.

    Plath said BB&T, which is approaching $100 billion in assets, has gotten so large that it is inefficient to use such a decentralized process. He said it will become more difficult for BB&T to buy and improve underperforming banks as it grows with this model.

    In addition, Plath said BB&T's current model includes higher personnel costs because of the salaries of regional bank executives and other administrative employees. He said those higher costs limit the bank's ability to offer competitive rates on loans and other products.

    Plath said BB&T should reorganize to focus on business lines, creating more division executives reporting to the corporate office. He also suggested changing how BB&T approaches reporting and incentive requirements for employees.

    "BB&T is struggling," he said. "Experience says you've got to change that ... business model. You can only deny that you're a big bank for so long."

    Most analysts said it is unlikely BB&T will scrap a model long espoused by Chairman and CEO John Allison IV, suggesting other changes.

    Dick Bov�, an analyst in the St. Petersburg, Fla., office of Hoefer & Arnett, said BB&T should undertake a thorough review of all products and services, eliminating underperforming offerings.

    Though they say large-scale layoffs are unlikely, some analysts see opportunities for BB&T to pare back its 26,000-employee work force. They say likely areas could include mortgage operations, as well as branch closings and consolidating tasks at various operations centers.

    "I'm sure (layoffs) are something that BB&T will be looking at continually," said Gary Townsend, an analyst at Friedman Billings & Ramsey in Arlington, Va. "If t

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    • bb&t has been doing all these things for awhile. these things take time to become effective folks, so dont get yer pants in a wad. have ya ever noticed how long it takes tax cuts on the fed level to show results? its like a marathon, the first 20 is what you hafta go thru to get to the last 6. during that first 20 you have many doubts as well as many hopes, so look ahead to the last mile. its gonna happen.

      • 1 Reply to stillginyit
      • Still,

        You have got to be kidding. This stock was at $67.685 a share March 31,1998 which was before a two for one split. That would be $33.84 a share today.

        Even a marathon should have been over at 6 years plus.

        I thought the reason the executives were paid the big bucks were that they were suppose to be able to adapt to market conditions and produce good results in all market conditions. Otherwise, why do they make the money they do?
        They have already decreased earnings estimates for 2004 and the estimates for 2005 are not that great in comparison to recent years.

        Even a blind pig can find an acorn occasionally. Why can't this company.

        Just my opinion,

        Jim

 
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