BB&T and SunTrust merging into new bank

Mae Love
February 7, 2019

Shares of Atlanta-based SunTrust jumped 8.3 percent to $63.62, above the acquisition price, while BB&T rose 2.4 percent to $49.71.

When the two Southern banks are combined, the new company will serve more than 10 million USA households, with approximately $442 billion in assets, $301 billion in loans, and $324 billion in deposits, according to a joint news release detailing the plan. SunTrust Banks, Inc.is one of the largest bank holding companies in the Southeast. Until then, Rogers will serve as president and chief operating officer. In 2021, Rogers will take over as CEO. The expected benefits of the transaction include a pro forma efficiency ratio of 51%, peer best ROATCE of 22% and projected tangible book value per share accretion at close for BB&T shareholders of approximately 11%, or 6% fully accounting for one-time merger charges.

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. Savings will come from facilities, IT systems, shared service, retail banking, and third-party vendors.

The deal certainly will be disruptive to the way the companies separately have done business.

Big bank mergers had been nonexistent after the financial crisis, when a flurry of government-directed mergers created a handful of megabanks. They've now decided that a big merger is better than that go-it-alone strategy.

SunTrust, the region's sixth-largest bank by deposits, has grown its Charlotte-area presence since entering North Carolina through acquiring Tennessee's National Commerce Financial in 2005.

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They will continue to maintain the Community Banking Center in Winston-Salem, NC and the Wholesale Banking Center in Atlanta. King said during a call with analysts Thursday that the combined business will invest heavily in technology. A new corporate headquarters will be established in Charlotte, N.C., including an Innovation and Technology Center to drive digital transformation.

As part of the deal, SunTrust shareholders will receive 1.295 shares of BB&T for each share they own.

BB&T shareholders will own 57 percent of the combined company and SunTrust will own the rest. He estimated divestitures at approximately $1 billion.

King will serve as chairman and CEO of the combined business until September 12, 2021. After that, he'll serve a further six months as executive chairman. The new company's board will be evenly split between the banks' current boards of directors.

SunTrust chairman and CEO William Rogers will serve as president and chief operating officer, then become CEO to replace King, finally adding the chairman title in March 2022. Even though BB&T shareholders will end up with a majority of shares, a key point for SunTrust was that the deal would treat the banks as equals.

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