Active mortgage lending is the key to community banking, says John A. Allison, chairman and CEO of North Carolina's BT&T Financial Corp.

Speaking before the New York Society of Security Analysts, Mr. Allison said that mortgage lending provides intimate banking relationships with a community.

For that reasons, $6.3 billion-asset BB&T, which stresses community banking at its operating units, has acquired eight thrifts since 1990. By law, thrifts must concentrate on mortgage lending.

Merger Policies

BB&T takes pains to ensure that employees who developed customer relationships are kept after an acquisition, Mr. Allison said.

"We don't gut these thrifts; we don't fire people or slash their benefits," he said. "I know that a lot of banks, in the name of efficiency, do those things. But we find that, by retraining the thrift employees in bank products, we achieve those economies anyway."

Mr. Allison also said borrowers will pay a bit more for a mortgage if their lenders are members of their community.

Frank Barkocy, a senior vice president at Advest Corporate Finance, New York, said most big banks buy thrifts to gain entree into other states, or simply

because there's often less of a premium in thrift stocks.

But BB&T "sticks to their community banking philosophy," Mr. Barkocy said. "It's served them well in their competition with NationsBank, Wachovia, First Union. They've prospered, and they've out-serviced the competition.

BB&T is well represented in eastern and western North Carolina. Now, Mr. Allison said, the bank is looking at thrifts, and possibly banks or insurance companies, in Virginia.

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