BB&T's Allison shows his confidence in bank's future

GREENSBORO, N.C. - Declaring his bank would be a ``winner&#39;&#39; in the future consolidation of the U.S. banking industry, BB&T Corp. chairman John Allison told shareholders he was betting his own nest egg on the bank&#39;s profitability. <br> <br> In a speech lasting more than an hour to about 150 shareholders attending the bank&#39;s annual shareholders meeting Tuesday, Allison predicted BB&T would continue to buy about four banks per year in key markets. <br> <br> ``Consolidation will be largely be complete in the next seven to 10 years,&#39;&#39; he said. ``By then there will be 25 banks that will dominate financial services. <br> <br> ``I think we&#39;ll be a winner,&#39;&#39; Allison said in an interview after the meeting. ``For 20 years people have been predicting we&#39;d be bought by somebody. They are still wrong.&#39;&#39; <br> <br> Allison said the fallout from collapsed energy trader Enron Corp. had led to cautions for employees, like those at Enron, who choose to invest all or almost all of their 401K investments in BB&T stock. <br> <br> The Enron debacle led to a lot of internal discussions by BB&T workers about their own 401K plans, he said. Many employees have opted to put a large share of their retirement contributions into company stock. <br> <br> In BB&T&#39;s case, 69 percent of all the assets in its retirement savings plan are in its own stock, said BB&T spokesman Bob Denham. <br> <br> The bank matches up to 6 percent of an employee&#39;s salary when they participate in the 401K plan, he said, and employees can move contributions from one fund to another at any time without penalty. <br> <br> Allison said 100 percent of his company 401K is invested in BB&T shares, even though the company&#39;s retirement benefit program offers about a dozen other funds in which he could invest. <br> <br> When his financial adviser advised him to diversify his portfolio, Allison responded: ``Hell no!&#39;&#39; <br> <br> ``If this ship goes down I will go down too as the noble captain must do,&#39;&#39; he said as shareholders laughed. ``But this ship is not going down.&#39;&#39; <br> <br> In the interview, Allison scoffed at suggestions that his strategy was risky. ``Bill Gates didn&#39;t diversify,&#39;&#39; he said about the Microsoft Corp. chairman who became one of the wealthiest people in the world through the growth of his company&#39;s stock price. <br> <br> On April 11, BB&T reported strong first-quarter profits, fueled largely by gains in insurance commissions, mortgage income and investment and brokerage fees. <br> <br> The Winston-Salem-based bank said its first-quarter profits were $309.6 million, up nearly 31 percent over $236.5 million in earnings in the first quarter of 2001. <br> <br> With the 10th-largest retail insurance agency network in the nation, BB&T earned commissions of $63.9 million in the first quarter from that line of business, up 52 percent over the same period last year. <br> <br> Earnings per share were 66 cents for the first quarter, up from 51 cents a share in the year-ago period. That met the expectations of Wall Street analysts. <br> <br> Allison also discussed the Winston-Salem-based bank&#39;s decision to replace Arthur Andersen LLP, which had been auditing the bank&#39;s books for 36 years. BB&T hired PricewaterhouseCoopers LLP as its independent auditor for 2002, a move that got the blessing of shareholders at Tuesday&#39;s meeting. <br> <br> ``It&#39;s a cumbersome thing to switch auditors,&#39;&#39; he said. ``It&#39;s a hassle and that&#39;s why companies don&#39;t like to do it.&#39;&#39; <br> <br> But he said BB&T had no other choice. <br> <br> Andersen has lost more than 10 percent of its 2,300 public audit clients this year. Like BB&T, most replaced the Chicago-based firm after a federal grand jury indicted it last month for alleged obstruction of justice for destroying documents relating to its client, Enron. <br> <br> ``I was surprised when the Justice Department decided to indict the company rather than individuals,&#39;&#39; Allison said. ``Interestingly, no one at Enron was indicted but Andersen was.&#39;&#39; <br> <br> BB&T has $74.9 billion in assets and operated 1,132 banking offices in North Carolina, South Carolina, Virginia, West Virginia, Kentucky, Georgia, Maryland, Tennessee, Alabama, Indiana and Washington, D.C.