Published: Thu, February 07, 2019
Economy | By

BB&T, SunTrust plan merger by end of year

BB&T, SunTrust plan merger by end of year

JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley brought in more than $120 billion combined in profit past year, the result of President Donald Trump's corporate tax cuts and a booming economy.

The combined company will be the sixth-largest retail bank in the country, putting BB&T and SunTrust in the ranks of other megabanks like JPMorgan Chase, Bank of America and Wells Fargo.

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.

Large US banks keep growing.

The merger marks the first major banking sector deal since the 2008 financial crisis. BB&T has always been based in Winston-Salem, N.C., while SunTrust is based in Atlanta.

The banks said Thursday that the combined company will be the sixth-largest US bank based on assets and deposits. The value of mergers and acquisitions in the USA financial-services sector more than doubled to US$196.5 billion in 2018 from US$82.3 billion in 2017, EY said. 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.

"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.

SunTrust shareholders will receive 1.295 shares of BB&T for each SunTrust share they own, the companies said in a joint statement on Thursday. BB&T shareholders will own about 57 percent and SunTrust shareholders will own about 43 percent of the business.

The combined company will operate under a new name, though the banks have not yet decided what it will be called. The combined company will retain operations in Winston-Salem, North Carolina, and Atlanta, the home markets for both companies.

BB&T, which was started by the Branch family in Wilson, and Atlanta's SunTrust will be combined into one bank with headquarters in Charlotte. Until then, Rogers will serve as president and chief operating officer.

Rogers will become CEO on September 12, 2021 when King is set to become Executive Chairman. After that, he will serve as executive chairman for six months.

On March 12, 2022, Rogers will become Chairman as well as CEO, at which point King will continue to serve on the Board of Directors until the end of 2023.

BB&T Chairman and CEO Kelly S. King will perform those same roles in the new bank until 2021 - when current SunTrust Chairman and CEO William H. Rogers, Jr., will take over as CEO.

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