Thanks for your reply
1. Actually I did read your post. Actually I tried to access the link but was unable to. I could have pursued this but found it inheritly easier to ask you. I am honestly supprised thet WB as done that good vis-a-vie its competition, then again other banks may not be going after deposits, it is an interesting question to comtemplate.
2. Speaks for itself.
3. Why would an institution sell off assets then re-enter a market where it already has a presence de novo? The market, for example, where WB had to divest in markets shared with their latest bank aquisition did not divest but one set of branches so the issue of de novo expansion has little to do with re-entering a market in which one already has holdings. Now, I know I am a little slow but if we are talking about markets in which there are greater than 30% share of deposits resulting in divesture then does that mean the whole bank has to sell off its deposits to comply? I don't think so. Additionally there are other things in the life of a bank other than deposits, bricks and morter etc. Sometimes a bank just might want the insurance package or a certain talent. I have seen a bank purchased just because someone wanted the location for a shopping mall. Now that isn't practical in this case but in the end it is self interest that will drive these decisions.
Last...I could bait you by saying that you proably didn't read my post but I won't . (Still) another poster, who has been interjecting coments about your fine post made a statemnt to which I replied as an afterthought on the post you refer to. I am sorry if it was a bit confusing but it wasn't meant for you. (my error) Although I am sure we would have a lively discussion should we know each other , I am in total agreement, I have never crossed paths with you. Sorry!
1. You didn't look at the link or read my post did you?
"...total of both banks in NC was around 27% or 28%."
Does that not say the total of both banks was 27 to 28% in NC alone rather than FTU was 27 to 28% in NC and WB was 27 to 28% in NC? As a matter of fact, FTU was around 17% and WB around 10% the 30th of June before the merger was consumated. So yes, that is astounding organic growth since the merger.
2. The Riegle-Neal Interstate Banking act specifies that the Fed shall not approve a merger that results in a combined bank that has deposit market share > 30% in either a state or an MSA. The only way around that is to divest assets to get the resulting combined bank under 30%. That means selling assets lock stock and barrel - accounts, physical structure, land ( or leases for the latter two if applicable ) and employees. So, your conclusion is correct.
3. True, you get paid for those things that you divest. But, first, you have the privilege of paying taxes on that money. Then you have the issue of rebuilding de novo. Because, you can't acquire major assets to get yourself back over. You have to do it through organic growth. De novo is generally harder to do and more expensive to accomplish than to purchase. Additionally, you have the burden of competing against your old employees ( who have built in motivation to beat you ), the inertia of your former customers who continue to go back to the same old bricks and mortar where they find familiar Banker Barb and Teller Tom and being a crowded market that they are not part of any more. Further, it takes huge economies of scale to make up for dropping 2/3 of bank deposits and the associated loss of income.
As to crossing paths over the years. I somewhat doubt it and suspect you have me confused with someone else. I am not from the South East. I have been there on business over the years primarily in the Charlotte area and occasionally visiting IBM offices in Research Triangle or Atlanta. I just invest in and follow the financial sector.
Interesting numbers but I am not sure if I completely understand your logic. Please clarify:
1. Was the resulting bank from WB/FU 27 to 28% in NC alone or was each bank at 27 or 28%. The reason I ask is that if it were a combined total then they have grown from 28% market share to almost 42 % in 5 years a phenominal shift in deposit markets in NC. If it were seperate figures then their combined market share would have been over 50% and reulted in the rath of the regulators. I am sure I am just not reading your numbers correctly so I would appreciate clarification.Also I think I remember BB&T advertising they were the number one deposit bank in NC a few years back, one would think that would represent more than 12.45 share.Anyhow!
2.As I understand your figures this would mean that WB could not merge with any NC located bank until market share figures were below 30%. Is that a correct assumption based on your interpretation?
3. I haven't gone in and analyzed market by market but looking at a glance I believe there would be huge ecconomies of scale that could be achieved through a merger of BB&T and WB. Remember that for those things you divest you do get paid.
As I have said often...I do not think that merger is proable but stranger things have happened in bank mergers and I ( regardless of still's confidence to the contrary) believe BB&T will be asorbed by another institution within 24 months or less.
Still...I have been around NC banks for a long time and was very involved with business dealings with Vince Lowe and others. If you are at the age and what you say you are we have crossed paths. BB&T used to be highly capitalized and lowly motivated. It got into the aquisition business late but in a big way after Vince died. I made a nice bit of change on the stock over the years but I still believe it moved to little to late. IMHO
The 30% rule had little effect on WB - FTU because the total of both banks in NC was around 27% or 28%. So, it only had an impact in restricted MSA.
However, it would have major impact on a WB - BBT merger. WB is at 41.40% and BBT is at 12.45%. The Fed is required by the referenced law not to allow a merger until the resulting bank is 30% or less; i.e. the law applies to the whole state in addition to specific MSA. That would require divesting about $40 Billion in deposts out of a total of $93 Billion. That is much more than the little effect except in extreme localize cases as you seem to imply. Does it make sense to buy a $66 Billion deposit bank in order to divest a minimum of $40 Billion in deposits?
MSA makes perfect sense. I think BB&T is a good buy but because it is inevitable that it will be sold, only things that are unknown are time, who with and price. BB&T's opportunity to survive in todays market dynamics is problamatic at best. IMHO they missed the survival point by about 2 1/2 years. Frankly I am impressed JA has kept the wolves from the boardroom. It's only a matter of time (within 24 months and counting)