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BB&T making $750 million stock offering

By Joe Rauch
/ Source: Reuters

By Joe Rauch

NEW YORK (Reuters) - Southeast regional bank BB&T Corp , which on Friday agreed to buy assets of lender Colonial Bank, said it is making an offering of $750 million of its common stock.

BB&T, shares of which were down 4.6 percent in midday trading, said the proceeds will boost its equity capital and will be used for general corporate purposes.

Last week, the Federal Deposit Insurance Corp said BB&T will buy about $22 billion of Colonial's assets. The FDIC and BB&T agreed to share losses on about $15 billion of those assets. The bank had deposits of about $20 billion as of June 30.

The Winston-Salem, North Carolina, bank said it will grant underwriters an option to purchase up to an additional 15 percent of the offered amount of shares.

"This is somewhat of a safety measure for the bank, and they showed earlier this summer they have an ability to readily raise capital," said Chris Marinac, an Atlanta-based bank analyst at FIG Partners LLC.

BB&T in May raised $1.5 billion in the wake of the government's "stress tests" aimed at determining big banks' potential to withstand a more severe economic downturn.

The following month, it repaid the U.S. government's $3.1 billion Troubled Asset Relief Program, or TARP; it is one of the few banks to do so this year.

The latest offering buttresses the bank's tangible common equity ratio on the heels of the Colonial acquisition, a deal dilutive to BB&T's capital. During the ongoing banking sector downturn, analysts and industry observers have used the tangible common equity ratio to gauge a bank's health and ability to absorb climbing credit issues.

Most banks, analysts said, are attempting to keep the ratio at more than 6 percent; BB&T's stood at 6.5 percent at the end of June, but that was before the Colonial takeover.

"They want to keep it at 6 percent, there's no doubt about that," Marinac said.

Credit Suisse Securities LLC and Deutsche Bank Securities are underwriters for the common stock offering and it will be co-managed by subsidiary BB&T Capital Markets.

BB&T shares were trading at $26.93, down 4.6 percent, on the New York Stock Exchange, underperforming the KBW Banks , which was down 3.2 percent.

(Additional reporting by Archana Shankar in Bangalore, Editing by Dinesh Nair and Gerald E. McCormick)