Coverage: BB&T and SunTrust are creating the country’s No. 6 bank

BB&T and SunTrust are merging in what the banks call a “merger of equals” to create the sixth-largest bank in the U.S. in an all-stock deal that values the combined bank at about $66 billion, one that serves more than 10 million U.S. households.

Mike Snider of USA Today had the news:

A new name for the bank will be chosen before the deal’s expected closing in the fourth quarter of this year.

A new headquarters in Charlotte, North Carolina, will be established, but the company will maintain operations in BB&T’s current headquarters of Winston-Salem, North Carolina, and SunTrust’s of Atlanta.

BB&T CEO and Chairman Kelly King will be CEO and chairman of the new company and its bank subsidiary through Sept. 12, 2021. Then, he will become executive chairman until March 12, 2022 and remain on the board until the end of 2023. SunTrust CEO and Chairman William Rogers will serve as president and chief operating officer until King steps down and then become CEO.

SunTrust shareholders will get 1.295 shares of BB&T for each share they own. They will own about 43 percent of the combined company, while BB&T shareholders will own about 57 percent.

Philip Van Doorn of MarketWatch.com reported that more bank deals could occur:

For large bank holding companies, regulatory scrutiny, including the intricacy of the Federal Reserve’s annual analysis of capital plans and failure contingency resolution plans, increases as they grow, leading to increased staffing and other costs. Another important asset-size threshold for banks is $50 billion. Federally insured depository institutions of that size or greater are required by the FDIC to file resolution plans, colloquially known as living wills.

BB&T was the 10th largest U.S. bank holding company as of Dec. 31, with $226 billion in assets, while SunTrust was the 11th largest, with $216 billion in assets. The combined company, whose name hasn’t been determined, would be the nation’s sixth largest, based on those figures. It will be based in Winston-Salem and be among the top three lenders by deposit market share in Florida, Georgia, North Carolina, South Carolina, Tennessee, Maryland, Virginia and West Virginia.

A similar deal was announced by TCF Financial of Wayzata, Minn. ($23.7 billion in assets), and Chemical Financial of Midland, Mich. ($21.5 billion in assets), on Jan. 27.

“With the Chemical/TCF deal last week, the market was thinking this may work,” KBW analyst Brian Klock said during a phone interview Thursday morning. “A lot of other banks in the range of $100 to $200 billion asset size may be thinking about this. This is the right thing to do, when you think about competing with the bigger banks that are putting so much investment into technology. If the franchises work well together, there are a lot of arguments in favor of deals like this.

Matt Kempner and J. Scott Trubey of the Atlanta Journal-Constitution report that the deal means changes for customers:

Mergers that create bigger banks tend to lead to some shifts consumers won’t like: branch closings, longer wait times and potentially less competitive rates, industry observers say. But customers also are likely to get some goodies, from more robust digital banking options to new specialized kinds of lending.

Change comes with its perils.

More than one in four bank customers who have been through a recent merger say they have switched banks in the last year, said Paul McAdam, a senior director for J.D. Power. Only 3 percent of people made such a jump if they hadn’t been through a merger.

After bank combinations, consumer complaints tend to rise, covering everything from branch closings to longer wait times, he said.

If the SunTrust/BB&T deal goes through, the combined bank will take on a not-yet-announced new name and be based in Charlotte. The result: None of the banks with the five biggest metro Atlanta footholds — and a combined 70 percent of deposits — will be based locally.