BB&T, Collateral Eyeing $10B of Annual Loans

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BIRMINGHAM, AL-If all goes according to plan, publicly traded BB&T Corp. will acquire the privately owned Collateral Real Estate Capital LLC, boosting the Winston-Salem, NC-based financial holding company’s commercial mortgage banking power. The combined company could generate as much as $8 billion to $10 billion annually in mortgage production.

Pending regulatory approval, the deal will close Nov. 1. BB&T will team Collateral and its existing commercial mortgage banking firm, Laureate Capital LLC in Charlotte, NC, which will operate under an as yet, unknown new name.

The combined company will have a $20-billion nationwide commercial loan servicing portfolio. It also would have many real estate financing programs, including life insurance companies, pension funds, commercial mortgage-backed securities and proprietary products. In addition, it will handle underwriting for Fannie Mae and Freddie Mac and offer FHA-insured multifamily products.

David A. Roberts, president and Birmingham-based CEO of Collateral Real Estate Capital, says his company’s huge growth in the past three years was one reason why alliances were sought. BB&T was going through the same process which, he says, made the match logical.

“When we combine the two companies, we’ll end up with 30 offices,” Roberts says. “Just as importantly, we’ll have all the products and services necessary to build a significant firm in the commercial mortgage banking industry.” He adds that from a collateral standpoint, teaming with Laureate would help take Collateral Real Estate to the next level of service, “which would be difficult to do as a privately owned company.”

Another appealing point of the BB&T acquisition is underwriting for loan operations would remain in Birmingham while loan-servicing centers will operate in both firm’s headquarters cities. No personnel changes or layoffs are anticipated with the merger.

“It was important for us to keep things in Birmingham. We have a great servicing operation and BB&T recognized that it was our strength,” Roberts tells GlobeSt.com. “The last thing we wanted to do was unwind something in which we’d invested a lot of time and energy.”

Gary Townsend, an analyst with Friedman, Billings, Ramsey & Co. in Arlington VA, points out consolidations between small, privately held financial companies and larger institutions are common. Furthermore, BB&T’s previous acquisitions have gone smoothly. He says the acquisition of Collateral Real Estate will benefit both sides. “Collateral ends up with access to funding from BB&T. On the other side, this will extend BB&T’s reach for this type of lending. They’ll have economies of scale and presumably can be more efficient,” Townsend says.