John A. Allison IV

Chairman and chief executive officer, BB&T Corporation/Branch Bank

Nationality: American.

Born: September 14, 1948, in Charlotte, North Carolina.

Education: University of North Carolina at Chapel Hill, BS, 1971; Duke University, MBA, 1974.

Family: Married Elizabeth McDonald; children: three.

Career: BB&T Corporation, 1971–1972, manager, financial analysis department; 1972–1973, manager, loan officer development program; 1973–1980, regional loan administrator; 1980–1981, manager, business loan administration; 1982–1987, positions unknown; 1987, president; 1989–, chairman and chief executive officer.

Awards: Honorary Doctor of Letters, East Carolina University, 1995; Consolidator of the Year, American Banker Best in Banking issue, 2001.

Address: BB&T Corporation, 200 West Second Street, Winston-Salem, North Carolina 27101;

■ John A. Allison IV intended his job with BB&T Corporation to be a stopgap between earning his bachelor's degree and attending law school. His plan was thwarted, however, when he was bitten by the entrepreneurial bug. Allison subsequently spent his entire career with BB&T and grew the bank from less than $5 billion in assets to $97 billion as of June 2004, making it the ninth-largest bank in the nation. Mergers and acquisitions were a major component of that growth, as was Allison's all-pervasive philosophy. The company's core values were clearly stated on its Web site: honesty, integrity, justice, reason, independent thinking, reality, productivity, teamwork, self-esteem, and pride. "Everything we do is guided by our core values," Allison wrote. "These values not only guide our everyday relationships with our clients, employees, shareholders and the communities we serve, but also provide the foundation for our approach to sound corporate governance."


BB&T was established in 1872 by Alpheus Branch, the son of a wealthy planter. Branch moved to North Carolina to attend military school and began a small trade business. In North Carolina, Branch met Thomas Jefferson Hadley, who was attempting to establish an educational infrastructure. Appalled by the swindlers who were scamming citizens' money, the pair decided to set up a reliable bank, which they named Branch and Hadley. Branch bought out Hadley in 1887 and was so successful that even when dozens of North Carolina banks failed after the 1929 stock market crash, BB&T doubled its number of branches and trebled its assets in the ensuing five years.

BB&T's reputation as a serial acquirer began in the 1960s. By early 1970 the bank had spread to 35 cities. In 1995 BB&T's merger with North Carolina's fifth-largest bank, Southern National, expanded its territory to 220 cities in the Carolinas and Virginia. From the time of Allison's election as chairman and CEO in 1989 to the end of 2003 BB&T made 60 acquisitions. The company expanded into 11 states and Washington, D.C., and managed 1,350 branch offices, its business including insurance and other financial services. According to Allison, all mergers were made within the context of BB&T's 10 core values. In a March 2004 address at the Kenan-Flagler Business School of the University of North Carolina, Allison said, "We figure out why an acquisition would be good for us but also why it would be good for the other company. If it's not going to be good for them, too, we don't want to do it. Every time we've completed an acquisition, we've always kept our agreements" (April 2004).


Allison's overall goal for BB&T was that it be an entrepreneurial and highly autonomous organization. His management philosophy allowed and encouraged a high degree of independence among branches and offices. This atmosphere made for a highly decentralized and entrepreneurial structure in which independent thinkers were respected and rewarded. With independence came a high degree of accountability. In an interview with Christine Van Dusen of the Atlanta Journal , Allison outlined some of the strategic processes he had implemented to attain his goal. Although Allison preferred in-market acquisitions, there were times when the company had to "push out," and at those times Allison preferred to make multiple acquisitions. He preferred to focus on businesses with between $250 million and $10 billion in assets. "Our real sweet spot is about $500 million to $3 or $4 billion," he told Van Dusen, explaining the reasons were twofold. First, he said, it was less risky. "If something goes wrong, then we're much more able to fix it, and it's certainly not going to kill our whole company. Second, we can add more value" (October 7, 2001).

In January 2002 BB&T reported net earnings for final-quarter 2001 had increased 14.5 percent for a net profit of 19.6 percent. Annual net income was $973.6 million, an increase of 39.4 percent from 2000, and 2001 became the 20th consecutive year of record recurring earnings for the bank. "We accomplished our earnings goals and other key strategic objectives during a very difficult economic environment," Allison was quoted at . "It is especially gratifying" (January 11, 2002).


Early in 2003 BB&T announced that in July it would close its largest deal ever—the acquisition for $3.4 billion of First Virginia Bank, of Falls Church, Virginia, which had $11 billion in assets. Analysts sharply criticized the acquisition, and investors seemed to lose confidence. BB&T's shares plunged more than 13 percent before beginning a recovery in May. In December 2003 BB&T announced a deal to purchase for $436 million Republic Bancshares, of St. Petersburg, Florida, which had $2.8 billion in assets.

In February 2004 BB&T notified stakeholders that earnings for the year would be down, primarily owing to a higherthan-expected $85 million restructuring expense after the First Virginia Bank purchase. Allison defended his latest acquisitions, saying he believed they were good investments for the future. He told stakeholders, however, they would see fewer acquisitions in the near term. "If we don't do any acquisitions in 2004 and 2005 it'll be OK with me," he was quoted in an article by David Boraks. "We plan to get back in the game in 2006, but we're really focusing internally for the next couple of years—milking the cow we've already bought, so to speak" (February 20, 2004). Allison did not entirely rule out the possibility of doing a deal if it were "cheap enough to make sense for a company whose earnings and share price have been harmed by the years of deals," wrote Boraks, who noted that the CEO still planned to pursue appropriate deals to bolster the bank's insurance and wealth-management services. According to Richard Craver of Knight-Ridder Tribune Business News , Arnold Danielson, chairman of Danielson and Associates, believed that because BB&T was firmly entrenched in the banking industry's second tier, the company would ride out the slump. "They've come so far so fast … and taking an acquisition breather could enable them to spring forward in 2005 or 2006 in a significant way" (February 20, 2004).

Allison admitted, however, that if BB&T could not demonstrate it could keep growing, it would face pressure to sell. He reiterated the commitment to autonomy the company had made to employees and stakeholders alike. Boraks quoted Allison as saying, "We've said we have an obligation to earn the right to be independent through superior performance. We plan to get our performance up and we plan to remain independent" (February 20, 2004). Boraks also quoted the analyst Christopher Marinac of FIG Partners as taking a wait-and-see attitude when evaluating the bank's continued success. "They have struggled to meet their plan over the past few years," he said. "There's no doubt there is a huge opportunity to move the dial in some of the new markets, but that opportunity was there in 2003, 2002, and 2001."


In April 2004 BB&T announced that first-quarter earnings fell short of analyst predictions. The company projected diluted earnings of $2.85 to $2.95 a share, and a survey by Zacks Investment Research revealed a consensus from analysts of $2.87 a share. A reporter for Triangle Business Journal called the shortfall "a rare misfire" for the company and quoted Allison as calling the performance "disappointing in comparison to past trends" (April 13, 2004). However, Allison had already outlined internal growth initiatives that included the possibility of going offshore with certain back-office operations (not to include customer-service functions), improving performance in underperforming markets, and expanding in highgrowth areas already within its network. Allison was confident the strategy would enhance the bank's prospects for 2005 and said he was already seeing progress in several important areas.

By June 2004 speculation of a takeover bid for BB&T had surfaced. Rumors were that San Francisco's Wells Fargo & Company, the nation's fifth-largest bank, was sizing up prospects for expansion into the Southeast. Although many analysts saw BB&T as a serious prospect, others, such as Robert R. Maneri of Victory Capital Management in Cleveland, Ohio, who managed shares of BB&T, said he never viewed the bank as a takeover target. Craver quoted Maneri as referring to BB&T's history: "Banks typically are bought, not sold, and any deal would require both John Allison's agreement and shareholder agreement that the offer was too good to pass up" (June 4, 2004). D. Anthony Plath, associate professor of finance at the University of North Carolina at Charlotte, believed the more time BB&T was given to benefit from the improving southeastern economy, the higher was the price Allison could command, thus discouraging takeover bids. Craver quoted Plath as saying, "It really comes down to how restive or how patient are BB&T's shareholders with the internal growth plan that BB&T is focused on this year" (June 4, 2004).


Throughout his career Allison emphasized his leadership philosophy and translated it into the bank's core values, which he firmly believed enabled BB&T to achieve its mission and purpose. In an address to students at Appalachian State University, Allison defined those philosophies. One was that good leaders allow people to make mistakes. "Good leaders … create a context around the mistakes, a context in which the mistakes must have a purpose consistent with the mission of the organization. The person making the mistake must learn from the mistake and must share what he or she has learned with others. In that context, mistake making is good because it permits us to learn to get better," he said (October 24, 1991). Among the dozen or more other attributes Allison believed were necessary for good leadership, one was vision. He said that vision could be big or small but must always be about being better.

Allison warned that the basic need of individuals to survive could get in the way of improving the world in which they live. While a person may be intrinsically motivated to make the world a better place, the need to survive often causes fear, and fear can cause actions that counter improving the world. "One of the great challenges, personally, for organizations and for leaders of teams, is to find a harmony between our need to make the world a better place to live and our need to survive" (October 24, 1991). He also warned against using fear as a motivator. After noting that people can be and are motivated by fear, Allison declared that fear is incredibly destructive. "When people are afraid," he said, "they literally can't think and can't be depended on to do the right thing. Good leaders do all they can to drive out fear."

Truth also was high on Allison's list of values. He noted that in his years with BB&T he saw large organizations fail, and in almost all cases it was because their leaders refused to tell themselves the truth. "They misled themselves, and therefore, a small mistake got to be bigger and became fatal. Telling yourself the truth is the first step. You can always be confident that you will get the good news out; it is more important to get the bad news out," he said (October 24, 1991).

In an address to an ethics class at his alma mater, the University of North Carolina, as in the many other presentations he gave at educational institutions, Allison emphasized honesty in all instances and defined honesty as simply being consistent with reality. He emphasized the importance of right values, high integrity, and moral principles in all walks of life, including running a multibillion-dollar business. Allison said that while having the right values does not always guarantee success in the day-to-day challenges individuals and companies face, it does increase the possibility. An article in the Daily Objectivist quoted Allison as saying, "Regardless of the short-term benefits, acting inconsistently with our principles is to our long-term detriment."

sources for further information

Allison, John A., IV, "Leadership," October 24, 1991, .

"BB&T Corp. CEO and Chairman of the Board Speaks on Leadership and Values," UNC Kenan-Flagler News , April 2004, .

"BB&T Misses 1Q Profit Target," Triangle Business Journal , April 13, 2004, .

"BB&T Reports Net Earnings Up 14.5 Percent in Quarter," , January 11, 2002, .

Boraks, David, "Why an Active Buyer Will Sit This Round Out," American Banker , February 20, 2004, p. 1.

"Corporate Governance: Message from John A. Allison, Chairman and Chief Executive Officer, BB&T Corporation," .

Craver, Richard, "Winston-Salem, N.C.-Based BB&T Bank May Not Pursue Acquisitions in 2004-05," Knight-Ridder Tribune Business News , February 20, 2004, p. 1.

——, "Winston-Salem, N.C., Leaders Nervous about BB&T Takeover Rumors," Knight-Ridder Tribune Business News , June 4, 2004, p. 1.

"Hero of the Day, John A. Allison," Daily Objectivist , .

Van Dusen, Christine, "Q & A: Acquisitions Keep BB&T in the Game," Atlanta Journal, Atlanta Constitution , October 7, 2001.

—Marie L. Thompson

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