SunTrust and BB&T merge in $66B deal
Southern banking giants SunTrust and BB&T announced Thursday they would merge in a $66 billion deal, the first big bank merger since the chaos of the 2008 financial crisis. The deal would create yet another financial titan in the U.S.
The company will be the sixthlargest retail bank in the U.S., putting BB&T and SunTrust in the ranks of other megabanks like JPMorgan Chase, Bank of America and Wells Fargo.
The combined company will have $442 billion in assets, $301 billion in loans and $324 billion in deposits serving more than 10 million households. The two banks’ market share will make them a formidable presence in the South, particularly in growing parts of the country like Atlanta and Nashville. The companies operate banks from Pennsylvania to Florida, and as far west as Texas.
In metropolitan Chattanooga, SunTrust is the second biggest bank behind First Tennessee with 21 offices and over $1.6 billion in local deposits. BB&T has four offices in the area and over $123.1 million as of June 30, 2018.
BB&T is the biggest bank in Dalton, Georgia, where its three offices had $484.6 million in deposits as of June 30, 2018. SunTrust is the second biggest bank and BB&T ranks No. 6 in Cleveland, Tennessee, where the two banks have nearly $430 million in deposits.
The combined company will keep a headquarters in Winston-Salem, North Carolina, where BB&T is based. It will keep a wholesale banking center in Atlanta, where SunTrust has its headquarters.
BB&T and SunTrust have about 740 branches within two miles of each other, or about 24 percent of all branch locations run by the banks. BB&T Chairman and CEO Kelly King said during a conference call that the companies will be “careful and methodical” about which branches they close.
“It’s an extraordinarily attractive financial proposition that provides the scale needed to compete and win in the rapidly evolving world of financial services,” King said in a prepared statement. “This is a trust merger of equals, combining the best of both companies to create the premier financial institution of the future.”
Big bank mergers had been nonexistent after the financial crisis, when a flurry of governmentdirected mergers created a handful of megabanks. Wells Fargo merged with Wachovia, JPMorgan acquired Bear Stearns and Washington Mutual while Bank of America purchased Merrill Lynch. Most bank mergers stopped after the crisis because the banks had to clean up their balance sheets, and the regulatory environment under the Obama administration made mergers more difficult.
Since that time, the gap between the size of the big Wall Street banks and the regional banks like BB&T, SunTrust, PNC Bank, Fifth-Third and others has only widened. The only bank with the size and scale of the new merged BB&T-SunTrust would be Minneapolis-based U.S. Bank, which has a large presence in the Midwest and Rocky Mountains. But even U.S. Bank, with $456 billion in assets, is dwarfed by the next largest institution, Citigroup, which has more than $1.4 trillion in assets.
The Trump administration is taking a much softer stance on bank regulations, and has appointed dozens of new business-friendly policymakers into critical positions at the nation’s bank regulators. Further, Congress passed a law last year to ease some of the rules put into place under the Dodd-Frank Act after the financial crisis.
“The regulatory environment is much easier for something of this size to happen,” said Brian Klock, an analyst with KBW.
Klock said he believes that with attention of the SunTrust-BB&T deal, as well as the easier regulatory environment, more large bank mergers may be coming.
Under the terms of the deal, SunTrust shareholders will receive 1.295 shares of BB&T for each share they own. BB&T shareholders will own about 57 percent of the combined company and SunTrust shareholders will own the rest — creating roughly a merger of equals. The new merged bank will have a new name, the companies said, and will be headquartered in Charlotte, North Carolina.
King will serve as chairman and CEO of the combined business until Sept. 12, 2021. After that, he will serve as executive chairman for six months. He’ll serve on the board until the end of 2023. Bill Rogers, chairman and CEO of SunTrust, will serve as president and chief operating officer of the combined company until Sept. 12, 2021. He will then become CEO for six months, after which he’ll add board chairman to his title.
Staff writer Dave Flessner contributed to this report.