Economy

BB&T and SunTrust will merge to create the nation's 6th largest bank

BB&T and SunTrust will merge to create the nation's 6th largest bank

And both companies have their names on buildings downtown - with SunTrust's atop its namesake SunTrust Center at 919 E. Main St. and BB&T's across the face of one of the Riverfront Plaza towers on East Byrd Street.

The transaction, which was described by some leading financial media as a BB&T acquisition of SunTrust, will entail a swap of 1.295 BB&T shares for each share of SunTrust. The coupling will create the sixth-largest bank in the United States.

Bank of America Corp Chief Executive Brian Moynihan this year predicted a new wave of big bank mergers at the World Economic Forum in Davos, Switzerland.

According to a joint press release, the pro forma company will have approximately $442 billion in assets, $301 billion in loans, and $324 billion in deposits serving more than 10 million households in the United States, with leading market share in numerous most attractive, high-growth markets in the country.

UBS bank analyst Saul Martinez said in a note to clients that "at first blush, this looks like a good deal for BB&T", given both the financial terms of the deal and the fact that SunTrust's "footprint is in higher income and household density markets".

The two companies employ a combined 4,600 workers around the region - 3,800 at SunTrust's local outposts and 840 at BB&T, according to the most recent figures from the Greater Richmond Partnership.

BB&T CEO Kelly King will serve as CEO of the combined company through September 12, 2021, when SunTrust CEO William H. Rogers will take over.

The two banks have always been considered natural partners and advisers said they do not expect another bank to make a bid. The U.S. economy was sizzling in previous year.

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The new company's community banking center will be in Winston-Salem and the wholesale banking center in Atlanta. Calling the deal a "merger of equals", the company said they will operate under a new name, which has yet to be determined.

Both banks have a significant presence in Florida and Polk County.

Analysts largely expect regulators to approve the deal, although it will likely draw scrutiny from vocal bank critics like US senators Elizabeth Warren and Bernie Sanders.

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.

"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.

William H. Rogers Jr., chairman and CEO of SunTrust will serve as president and chief operating officer of the combined company, and Kelly S. King, chairman and CEO of BB&T, will serve as chairman and CEO.

Each company will appoint half the seats on the board of directors. He will then become CEO for six months, after which he'll add board chairman to his title.

BB&T stock was up about 5% in early trading, while SunTrust bounced more than 10%.


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