Regional banks BB&T, SunTrust join to create $66B operator

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A new name is yet to be determined.

Wachtell provided legal advice to BB&T on this deal, and SunTrust has had plenty of mortgage-related issues in the past that community groups could cite as a basis for objecting to the deal. It will have about $442 billion in assets, $301 billion in loans and $324 billion in deposits serving more than 10 million households.

Both companies' boards of directors unanimously approved an agreement to come together in an all-stock merger of equals valued at about $66 billion. In 2021, Rogers will take over as CEO.

"We have been expecting a step up in the pace of banking industry consolidation with the belief that the increasing importance of scale and branding coupled with regulatory support (i.e., the $700bn tailoring line) would drive bigger bank deals", Credit Suisse's Susan Katzke said in a note to clients. The primary sources of cost savings are expected to be in facilities, information technology/systems, shared services, retail banking and third-party vendors. BB&T Chairman and CEO Kelly King said during a conference call that the companies will be "careful and methodical" about which branches they close.

The deal certainly will be disruptive to the way the companies separately have done business. They've now decided that a big merger is better than that go-it-alone strategy.

It will keep a community banking center in Winston-Salem, North Carolina, where BB&T is based.

Atlanta-based SunTrust rose 5.5 percent to $62 before the opening bell, a few cents short of its acquisition price. In a CNBC interview, executives said the merger would allow them to invest more heavily in new technology demanded by customers.

In Charlotte, the new bank will house an innovation and technology center focused on digital transformation, the companies said.

BB&T shareholders will own 57% of the new entity, while those of SunTrust receive 43%. 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. They include Chris Henson, Clarke Starnes (Chief Risk Officer), Daryl Bible (Chief Financial Officer), Allison Dukes, Brant Standridge, David Weaver, Dontá Wilson, Ellen Fitzsimmons, Ellen Koebler, Hugh (Beau) Cummins, Joseph Thompson and Scott Case. GAAP and Cash EPS accretion per SunTrust share in 2021 is expected to be approximately 9% and 16%, respectively (based on Street estimates). SunTrust Chairman and Chief Executive Officer William H. Rogers, Jr. will serve as President and Chief Operating Officer. He'll serve on the board until the end of 2023.

William H. Rogers, Jr., Chairman and Chief Executive Officer of SunTrust will serve as President and Chief Operating Officer of the combined company and its bank subsidiary until September 12, 2021, at which time he will become Chief Executive Officer of the combined company and its bank subsidiary.

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