BB&T to close BankAtlantic deal after receiving Fed OK

Tue Jul 31, 2012 7:22pm EDT

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(Reuters) - U.S. regional lender BB&T Corp (BBT.N) said it would complete its acquisition of BankAtlantic Bancorp's (BBX.N) banking subsidiary on Tuesday after federal regulators approved the purchase, a deal that expands its presence in southeast Florida.

Winston-Salem, North Carolina-based BB&T agreed in November to buy BankAtlantic's primary subsidiary but had to sweeten the offer in March after it faced resistance from investors who feared the purchase favored the management over debtholders.

Under the agreement, BB&T acquires $3.3 billion in deposits and $2.1 billion in loans for an estimated premium of $301 million above the net asset value of BankAtlantic at closing. It also agreed to assume the holding company's obligations on $285 million in trust preferred securities.

An order by the Federal Reserve, one of three regulators to approve the deal, commits BB&T to improve BankAtlantic's performance under the Community Reinvestment Act, a 1977 law that requires banks to meet the lending needs of the communities in which they operate, including low- and moderate-income neighborhoods.

BankAtlantic received a "Needs to Improve" rating in its latest CRA examination, which noted violations related to an overdraft protection program. In its most recent exam, BB&T's ranking fell to "Satisfactory" from "Outstanding" for "substantive violations" of anti-discrimination provisions of fair lending laws, the Fed order said.

The violations were considered to be confined to one of the bank's business lines and certain regions, according to the bank's CRA report, which was made public in 2010. The Fed said it consulted with the Federal Deposit Insurance Corp, which supervises BB&T, about the bank's fair lending record and progress made in addressing the matter. The FDIC and North Carolina's banking regulator also approved the merger.

Ken Thomas, a Miami-based CRA expert, said he raised the issue of BB&T's CRA rating in public comments he submitted to regulators about the merger. The bank needs a plan for upgrading to an outstanding ranking and addressing its fair lending issues, he said.

BB&T spokesman David White said the Fed and FDIC approved the deal "after considering all existing information."

In February 2011, BankAtlantic and its holding company were ordered by regulators to boost capital after losses ballooned on bad real estate loans made during the housing bubble. BankAtlantic has not posted a profit since 2006.

BB&T, which had $178 billion in assets as of June 30, said it will change BankAtlantic's signs in the fourth quarter. It will now have the sixth-largest share of deposits in the Miami market.

BankAtlantic shares rose 1.3 percent to $6.04, while BB&T shares fell 1.1 percent to $31.37.

(Reporting By Rick Rothacker in Charlotte, North Carolina; Editing by Tim Dobbyn and Steve Orlofsky)

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