BB&T Corp. is buying an employee benefits administration company it hopes will complement its growing insurance brokerage business.
The deal for Greensboro, S.C.-based W.E. Stanley & Co., announced Tuesday, would give the bank an additional 700 clients for the administration of 401(k) plans, traditional pension plans, and other benefit plans.
Stanley would operate under its own name and management as an independent subsidiary of Winston-Salem, N.C.-based BB&T.
Including its in-house employee benefits administration arm, BB&T would have a total of 1,250 clients, mainly small and medium-size businesses, once the deal closes at the end of the month.
The new clients represent a large market for BB&T's property/casualty, life and health, and title insurance, and plans for cross-marketing are already being made, said Ken Miller, executive vice president with the bank.
"Small to medium-size businesses are our primary market," Mr. Miller said. "Our intent is to offer that market segment the broadest array of products and services to meet all their financial needs. We do expect some real synergies from this."
BB&T is one of several large banks buying market share in the employee benefits consulting arena. Mellon Bank Corp. bought Buck Consultants in 1996, and last year Bank of New York acquired Stanwich Benefits Group Inc.
Mr. Miller declined to say how much the deal cost or to predict how much it would add to BB&T's bottom line.
Winston-Salem, N.C.-based BB&T has been on an insurance agency acquisition tear over the past few years, creating one of the nation's 30 largest networks, in and around the Carolinas.
Stanley has more than 700 clients in the eastern half of the nation, largely in the Carolinas, Virginia, Maryland, and Tennessee. It designs and administers pension plans, defined-contribution plans, profit-sharing and employee stock ownership plans, health and welfare plans, executive compensation plans, and "cafeteria" benefit plans, in which employees select benefits like life, health, and dental coverage.
Louis Harvey, president of Dalbar Inc., a Boston-based consulting company, said the deal could be a boon for the cross-selling of insurance and employee benefits services.
But he questioned the bank's decision not to merge Stanley with its in- house business, a move that would create economies of scale.
"It's low-margin, hard work," he said of the business in general. "The reason is that there's no scale."
But Mr. Miller said BB&T did not want to make any move that would change Stanley's independent status or affect its client relationships.
"We don't want to do anything to detract from the value of their relationships," Mr. Miller said.
BB&T's in-house administration business is run out of the bank's trust department.
BB&T Corp., a multibank holding company with $31.5 billion of assets, operates 521 banking offices in North Carolina, South Carolina, and Virginia.