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Despite no 'mass layoffs' message, BB&T is cutting jobs

Posted January 9, 2009

— BB&T, North Carolina’s third-largest bank, is laying off an unspecified number of employees and is leaving some positions vacant after employees leave or retire as it grapples with the recession gripping the U.S. economy.

The cuts, including some announced this week, are taking place despite recent assurances from BB&T (NYSE: BBT) executives to employees.

“The message for the last several months has been that ‘we don’t foresee any mass layoffs,’” BB&T Senior Vice President Bob Denham told WRAL.com in an interview Friday. “Maybe that wasn’t a good way to say it.

“Our point has been that mass layoffs were not going happen at this bank like at some others that have cut thousands of jobs. But there are no guarantees that positions will not be eliminated and employees not be impacted.”

In October, BB&T accepted $3.1 billion from the federal government as part of the U.S. efforts to infuse capital into the nation’s financial system. Since that time, Denham said BB&T has lent more than half those funds.

Like other banks, BB&T has not escaped Wall Street scrutiny. On Jan. 6, analyst firm Sandler O’Neill cut BB&T’s stock to “sell” from “hold.”

Mike Walden, an economist at North Carolina State University, said BB&T’s cost-cutting was not a surprise.

“BB&T is considered a strong institution,” he said. “I assess their downsizing to be related to the weak economy and lack of lending opportunities.”

As the recession deepens, and with many economists saying the downturn won’t end until much later this year, Denham said BB&T had no choice but to review budgets and expenses.

“We have to do everything that is necessary,” he said. “It’s important that all companies do what they can (to) stay above water.”

Positions being cut or frozen “run the whole gamut” from teller jobs to some “at the home office,” he said.

However, the Winston-Salem-based bank, which employs some 31,000 people, has not closed any branches and has not mandated job cuts or specific budget reductions, Denham explained.

BB&T also continues to hire “on a selective basis” and would consider possible acquisitions as the troubled U.S. financial sector continues to tremble in the wake of last September’s Wall Street meltdown, Denham added.

“Some people were told this week that their positions were being eliminated,” Denham said. He also said some employees are being asked to work in different cities or at different branches. “This was not easy” he added. “Some of these people were very good employees.”

“We don’t know the number,” he asked when how many people had been let go. “We don’t know the percentage of employees that will be affected.”

Kelly King, a Raleigh native and longtime BB&T executive who took over as CEO on Jan. 1, has instructed managers to review budgets, Denham said.

“Managers have been given mandates to find ways for how we could be more efficient,” Denham explained. Since the budget planning cycle for 2009 started last fall, Denham said managers have been asked to rework them “five or six times.”

Pointing to the financial chaos that consumed Wachovia, which is now part of Wells Fargo, Dehnam said BB&T is reviewing its operations in order to avoid a similar situation.

“If we don’t do it,” he said, “that is what happened at Wachovia. If you don’t control costs and run a good business, then everybody is basically told to go home.”

In making work force reductions, Denham said the bank has sought “to gain efficiencies” primarily through attrition and retirement.

“We are looking to achieve savings through attrition – that’s the No. 1 goal,” he said. “We have been going through that process for a few months now.”

Denham said BB&T “probably ranks in the top 1 percent” of U.S. banks in terms of financial health, but acknowledged a slowing economy has hurt.

“The reason we’re doing that is we are not unlike any other financial institution in the U.S.,” he said. “We certainly have not gone unscathed.”

Shares of BB&T, which is set to announce fourth-quarter earnings in the next few weeks, traded at just over $23 on Friday. That’s nearly half what the stock sold for last September.

BB&T is one of North Carolina’s largest public companies, with a market capitalization of nearly $13 billion. It operates some 340 branches across the state, including 46 in the Triangle.

Bank of America and Wells Fargo are the state’s top two banks.

8 Comments

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  • jzdavis Jan 16, 2:10 p.m.

    CJM - It is not BB&T, but Federal Regulations that impose those requirements. Go to another regulated financial institution and it will be the same. The money was not used to build branches! It was just received and the CEO stated in other news journals that the bank did not want to participate, but in order to be competitive in the market with banks that did take the money, BB&T had to participate. You may want to read more about what caused this situation - it is not this bank!

  • rcrdngcountry Jan 13, 10:35 a.m.

    bb&t bought up smaller banks with the money they got from the
    bail out. they want to grow bigger and bigger, always greed.
    i thought the bail out was to help the forclosures, and to start
    money lending again. if they are in trouble, why keep buying
    more banks. we, the tax payers really got it laid to us in this
    bank bail out.

  • jw63 Jan 9, 3:35 p.m.

    Yet there are I think three new branches in the works to open.

  • nbwcme Jan 9, 3:32 p.m.

    nerdlywehunt- That isn't entirely true. The money came so banks could help bail out/buy out other banks. In return, the bank that received the money has to pay out the debt of the other banks.

  • Slip Kid Jan 9, 3:27 p.m.

    When the press loves you, they can't build you up enough (part of the giddy greed that we are paying for now), and when they don't like you, they tear you down pretty fast.

    Sounds like BB&T is running their business decently.

    I can't stand today's typical mass media. The news can't be facts, it has to be drama and spiced up with opinion. But, hey, "That's Entertainment"!

  • fudgeyall Jan 9, 3:24 p.m.

    BB&T got 3.1 million. Don't post unless you read the article first. I could say few more things about your post, but I'd rather keep it to myself.

  • CJM Jan 9, 3:15 p.m.

    How about treating their customers better instead of just "cutting costs"? I have had my business account there for 5 years and personal accounts for much longer. I used to be able to deposit a check at the ATM and have full access to the funds. That changed last year, when they limited it to $100. This year, in 2009 already, they have decided to start holding ATM checks for 5 days. I have a micro business and am always paid in checks. This does not work for me when I have bills to pay. Since checks are all cleared though the feds now, there is no excuse for holding MY money for a week. Unacceptable! I now have a PayPal debit card and will gladly eat 4% of my checks for have immediate access to my funds. BB&T is getting worse, not better.

  • nerdlywehunt Jan 9, 3:12 p.m.

    BBandT also got 5 billion in the bailout money even though they didn't need it. They took it because it was available. This is exactly the kind of greed that got us in this mess. The banking industry is like an organized criminal enterprise!