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BB&T Corporation (NYSE:BBT) reached an agreement with SunTrust Banks, Inc. (NYSE:STI) that will see the two regional banks merge into one and become the sixth-largest U.S. bank.
What Happened
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The merger of equals will result in a new bank entity that will have around $442 billion in assets, $301 billion in loans, and $324 million in deposits and serve more than 10 million househoulds in the U.S., the companies said in a press release. The rationale behind the combination is to generate better scale, realize $1.6 billion in annual net cost synergies by 2022, achieve industry-leading financial and operating metrics, among other benefits.
Why It's Important
Multiple macro factors, including tax overhaul and deregulation in the financial system made it possible for BB&T and SunTrust to merge, said Brian Levitt, senior investment strategist at OppenheimerFunds. As such, merger between two smaller banks at this time shouldn't come as a surprise to generate synergies and better compete with the "handful of banks that control most of the deposits."
What's Next
Gerard Cassidy of RBC Capital Markets said on CNBC's "Squawk Box" the combination of BB&T with SunTrust could close with minimal tangible book value dilution and earnings accretion. As such, similar regional banks with assets of more than $100 billion will likely be exploring a similar move as the synergy savings are quite notable and only possible through a merger.
SunTurst' stock was up 11 percent at time of publication, while BB&T's stock was up about 5.6 percent.
Related Links:
SunTrust Banks' 'Great Run' Faces Emerging Headwinds, Piper Jaffray Says In Downgrade
BB&T Should Trade At Premium To Other Large-Cap Banks, Says B Riley FBR
Photo via Wikimedia.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.