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Robert Trigaux

Stop the presses: A bank raises its dividend



Johnallisonbbt So what's the ONE BIG THING any bank could do in these tough times that would yell "We're strong" amid the weak? How about raising your dividend? That's precisely what North Carolina's BB&T Corp. did Tuesday. BB&T's board of directors declared the 2009 first quarter dividend of 47 cents per share, a 2.2-percent increase over the 46 cents paid in the first quarter of 2008. The dividend will be paid Feb. 2 to shareholders of record as of Jan. 9.

A one penny increase may not sound like much. But it's plenty when so many are slashing dividends. Maybe it's a going away present to BB&T chief John Allison, the Greek-philosophizing CEO (in photo, courtesy of AP) who's retiring at the end of this month after many years. BB&T marched into the Tampa Bay market years ago by purchasing the old Republic Bank and has continued to expand.

In a recent interview with the Charlotte Observer, Allison offered some punchy responses to the current economic woes in the country and the banking industry. Here's a shorthand version:

* On the idea of freezing home foreclosures: "All that would do is keep the market from correcting and make it harder to get home mortgages in the future, because banks see it as an added risk. The guy that's not paying you – a lot of times he just doesn't want to, he's getting a free ride."

* On the misguided strategy of pumping federal money as new capital into banks: "Market corrections are not all bad; they get rid of irrational and poorly run companies. … The classic example is Citigroup. In my career, this is the third time Citi has failed (and been bailed out), and every time, they've gotten bigger and worse after the fact."

* On why BB&T took federal funds if it's such a bad idea: "We took it for two reasons. One, there was a lot of regulatory pressure on the large banks to take TARP (the federal program's Troubled Assets Relief Program). They very strongly – very strongly – encouraged banks our size to participate. And second, if you allowed your competitors to get it and you didn't, it would hurt you relative to your competitors, so you had an obligation to your shareholders to take it."

For the record, BB&T shares closed Tuesday at $29.70,  up more than $3 on the day and up more than $11 from  the company's 52-week low last July. That's a recent track record that has most bigger banks drooling with envy.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 11:23am]


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