BBT was mentioned as a possible buyer of SBIB, Sterling. Question: If it happens, what is the chance of it being a cash deal, rather than stock or a combo?
Just speculation but it would be unlikely to be cash, correct? Any opinions?
I think there are a lot better buys out there than sterling. It would cost them 2X tangible book value, and they are just a small fry in the Texas market with very little market share. Just my thoughts.
Agree. They also said the target was a $3B bank in Texas for expansion and to get into the top 5 for the state.
They may be something to look at, but the pain involved to convert and integrate does not appear to be worth the trouble.
I've been wanting to ask this question for years. I've been long BBT for at least 20 years with several thousand shares. I've watched BBT grow from a small Southeast bank to one of the leading regional banks. They've done it by buying up smaller banks and other businesses. Here's my question - how does that benefit ME the small stockholder?? The stock price has not gone up that much. The dividend isn't that great. I wish BBT would take the money it costs to acquire Sterling and distribute it to the stockholders as dividends instead. After all - why did stockholders buy the stock in the first place if not to make money?? The money seems to go to CEOs, CFOs, board members, etc. instead of to the stockholders. FORGET STERLING!! Increase the dividend so that the stock price can rise. Am I wrong?
GREAT POST...you have been long BB&T for 20 years? Really? The senior mgmt of BB&T no doubt thanks you, as you are exactly the kind of sucker they want owning the stock, but you should fire your broker.
There is nothing special about this company. In the 1990s, when everybody thought bricks and mortar retail banking would be replaced by the internet, these guys went shopping in the SE for small community banks, used their overvalued stock price as currency, bought them, and then folded the senior mgmt of these banks into BB&T and got rid of the back office. That was their last piece of good business strategy. That was about 20 years ago. They also started wholesale purchasing of insurance agencies, broker dealers, etc. But for the last +/-11 years this stock has been asleep. You can't run a $100B+ bank like a little community thrift. Plus, BB&T has never really learned how the corporate credit equation works....they would rather say NO. When the recession hit, these guys thought they had built a better mouse trap, but in reality, just saying NO does not make you smarter, just means you got lucky. They have failed to capitlaize on opportuniites durign the recession because they have not figured our credit is a commodity. BB&T always wants to lend at greater rates than their peers, and that tactic only gets you so far. As for a dividend, they need loan growth, a lot more than they have, and they need to quit focusing on collecting non-interesting bearing deposits as a core strategy. As usual, BB&T is simply trying to achieve greatness by managing expenses and its cost of capital. They need rev and balance sheet growth. They also need new talent and new ideas, doing the same thing the same way for 40 years underscores their problem, that's why you, the little shareholder, are frustrated. You would have been better off 10+ years ago selling your BB&T stock and buying a 10-year UST note...you would have had a better return. Fiancials are and have been a very bad long term hold, you should consider BB&T a "trade" not an "investment" and you are about 10 years too late in making your trade.
Thanks for the response. It's an odd question, but without going into it, I would want any acquisition of sterling to be stock. I know most are stock deals but I'm not too familiar with banks. And this is obviously just speculation with bbt.
Should BBT buy with stock or cash? Interesting question. Since BBT's stock is depressed, should they use it as currency to purchase other companies? Would this not serve to dilute existing shareholders? The answer always depends on the price paid for the target, of course, but the low stock price makes it harder for BBT to be a purchaser. As a long shot, could BBT be a target instead? The Canadian banks would love to have this franchise I would think, and the price is right, esp. with the strong Canadian dollar.