BB&T and SunTrust are joining to create new $66 billion bank

BB&T and SunTrust are joining to create new $66 billion bank

BB&T and SunTrust are joining to create new $66 billion bank

The deal is expected to close later this year, pending regulatory approval.

They will continue to maintain the Community Banking Center in Winston-Salem, NC and the Wholesale Banking Center in Atlanta. In a CNBC interview, executives said the merger would allow them to invest more heavily in new technology demanded by customers.

Big bank mergers had been nonexistent after the financial crisis, when a flurry of government-directed mergers created a handful of megabanks.

SunTrust Banks and BB&T have agreed to a $66 billion merger that will create the sixth-largest United States bank. Brian Moynihan, chief executive officer of Bank of America Corp., said last month he could envision the creation of another megabank, given the large number of small players spread throughout the country.

The merger joins two banks that have grown along with the bustling Southeast and Mid-Atlantic regions where they began.

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.

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.

In the few hours since the deal was announced, both banks have been calling their biggest clients and shareholders to make sure they understand that the deal is "positive for everybody", King said on a conference call with analysts Thursday morning. About one-quarter of the BB&T and SunTrust branches, 740 of them, are within two miles of each other.

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.

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 hard.

BB&T will own 57 percent of the combined company and SunTrust shareholders will own about 43 percent.

On Dec. 7, the Federal Reserve Board quickly approved two of the largest bank mergers of the year, Cadence Bancorp's merger with State Bank Financial Corporation and Synovus Financial Corp's merger with FCB Financial Holdings. 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.

BB&T has agreed to pay US$28.1 billion for SunTrust's equity as of Wednesday's closing price, according to data compiled by Bloomberg. "So ultimately, (it) should get done".

Royal Bank of Canada advised BB&T, while Goldman Sachs Group Inc. worked with SunTrust.

"It's an extraordinarily attractive financial proposition that provides the scale needed to compete and win in the rapidly evolving world of financial services", BB&T Chairman and CEO Kelly King said in a prepared statement.

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