The new bank will have a new name that hasn't been announced yet. The two banks, who have a significant presence in the Mid-Atlantic, cited the need to "accelerate investment in transformative technology" as a major reason behind the combination. The companies operate banks from Pennsylvania to Florida, and as far west as Texas. Wells Fargo merged with Wachovia, JPMorgan acquired Bear Stearns and Washington Mutual and Bank of America purchased Merrill Lynch.
Deal activity in the banking sector languished after the financial crisis a decade ago as stricter rules were imposed on lenders with more than $50 billion in assets and regulators barred banks with compliance issues from expanding. BB&T has always been based in Winston-Salem, N.C., while SunTrust is based in Atlanta.
Southern regional banks BB&T and SunTrust are combining in an all-stock deal to create a new bank valued at about $66 billion. Chief Executive Officer Brian Moynihan last month said another round of consolidation in the US could lead to the emergence of a new competitor. 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 companies said they expect to save $1.6 billion a year in expenses by 2022 and that's likely to mean layoffs, as with past bank mergers.
Under the terms of the merger agreement, SunTrust shareholders will receive 1.295 shares of BB&T for each SunTrust share they own. Shareholders of Winston-Salem, North Carolina-based BB&T will own approximately 57 per cent of the combined company and Atlanta-based SunTrust's holders will own about 43 per cent.
Kelly S. King, chairman and chief executive officer of BB&T, will serve as CEO of the combined company through September 12, 2021.
The two banks have hundreds of branches within two miles of each other, but they serve different segments of the market.
King told analysts the companies would be "careful and methodical" about which branches they close.
Kelly King, BB&T's chief executive, described the deal as "a true merger of equals" that would give the combined group "the scale needed to compete and win in the rapidly evolving world of financial services". On March 12, 2022, Rogers will also become Chairman and Chief Executive Officer of the combined company and its bank subsidiary. SunTrust Chairman and Chief Executive Officer William H. Rogers, Jr. will serve as President and Chief Operating Officer. King will continue to serve on the Board of Directors of the combined company until the end of 2023.