BB&T Corp. in $750 Million Public Offering of Common Stock

Branch Banking Trust (BB&T) announced today that it has initiated a $750 million public offering of its common stock.

There was no specific reason given for the funds generated from the offering other than they’ll be used for general business purposes.

In case of overallotments, the underwriters have a 30-day option in which to acquire up to 15 percent of in shares to cover them.

This comes on the heels of the big news for BB&T of taking over $20 billion in deposits and acquiring another $22 billion in assets from the failed Colonial BancGroup. Colonial is the 6th largest bank failure in U.S. history and could end up the 2nd largest behind Indymac before it’s all over. It is by far the largest bank failure this year.

After the  State of Alabama Banking Department appointed the Federal Deposit Insurance Corp. as receiver of Colonial BancGroup on Friday, it almost immediately signed a loss-sharing deal with BB&T.

Revealing some more details of the deal today, BB&T executives said they have plans in place to cut the expenses of Colonial by 30 percent or $170 million. Estimates are it’ll cost about $245 million to integrate the bank into BB&T.

For BB&T this is a big move because it extends its presence in Alabama from only three branches before the agreement to 93 after adding Colonial’s branches to their presence there.

The presence of BB&T in Florida was enlarged even more, as they added another 204 branches to their existing 107, bringing them to an immediate and additional total of 311.
 
After BB&T absorbed the $20 billion in deposits from Colonial BancGroup and acquired the $22 billion in assets, the remaining assets from Colonial will be liquidated by the FDIC.
 
In most cases the cause of the majority of bank failures has been in relationship to loans to construction companies and commercial loans. This will remain a huge problem for some time, along with the residential loan re-sets about to come due over the next couple of years.