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3 TAKEAWAYS YOU NEED TO KNOW
- BB&T and Suntrust will combine to be the 6th largest bank in the U.S., with interests in continue expansion to high-growth markets.
- The synergies gained from the merger will allow the new bank to leverage complimentary fee-generating businesses. Expanding BB&T’s insurance platform and SunTrust’s consumer lending platform (Lightstream) will be a winning strategy.
- As the new Bank makes its headquarters in Charlotte, the combined Bank’s growth potential will put them on the map against other money center banks.
Regional banking entities SunTrust and BB&T announced their merger plans on Thursday, February 7, 2019. With unanimous board support, Charlotte-based BB&T will purchase Atlanta-based SunTrust for $28.24 billion in an all-stock deal. Once combined, the single bank (under a yet-to-be-determined name) will become the sixth largest in the U.S., will serve more than 10 million households, and will be headquartered in Charlotte while maintaining SunTrust’s Atlanta operations. In a word, this news is huge. Experts have said the announcement is the biggest bank merger since the 2007-2009 financial crisis and will likely pave the way for other banks to follow suit. Beyond implementing a potential domino effect on the industry, there are a few other windfalls to understand.
HERE’S WHAT YOU NEED TO KNOW ABOUT THE BB&T ACQUISITION BEING TOUTED BY INSIDERS AS A “TRUE MERGER OF EQUALS.”
BB&T will become even more competitive in the insurance space.
BB&T Insurance Holdings is already an insurance giant in the banking world. However, by acquiring SunTrust, they will even further cement their place in the industry. As the 5th largest insurance holder in the U.S., BB&T is already familiar with turning insurance industry heads. With the acquisition, the TBD named-bank will capitalize on BB&T’s insurance strengths combined with SunTrust’s corporate and investment bankingknowledge to create a financial powerhouse.
“There’s no question that this merger will make the new bank one of the most competitive brokers within the insurance realm,” says Patrick Roberts, director of lender strategy at MountainSeed. “This transaction will have an incredible influence and impact on how banks consider M&A moving forward, but just as importantly, it will aggressively tip the power scales in terms of insurance acquisition. BB&T is already a premium insurance provider in the U.S. and Canada. With the combined footprint and customer base of Suntrust, substantial insurance operations will become a leading revenue opportunity.”
The new bank will focus on funding technology and innovation.
Along with the announcement of the bank mergers was the announcement that the married banks will turn their attention to a “digital first mindset.” SunTrust’s CEO Bill Rogers says the new bank plans to invest $100 million in technology and innovation and even referenced a future technology innovation center. In a world where cloud-based channels are becoming more and more relevant, this forward-thinking strategy will make a difference in the bottom line while encouraging other financial institutions to consider their own digital plans.
Already prominent in the financial sector are a number of technology trends that are shaping everyday processes, such as AI, sharing economies, and blockchain. As the unnamed new bank moves toward a more digital experience, other financial institutions will need to be aware of the digital banking trends and begin planning for implementation, or risk being made irrelevant by the giant.
CRE will experience inevitable growth around the Charlotte market.
Of course, as it often goes with big industry moves, we can expect to see changes in CRE both in and around the Charlotte market, and we can only assume job growth and impact in Charlotte will be far-reaching. Charlotte already holds the title as the number two financial center in the U.S., and as the new headquarters opens, that position will only be further solidified. What are the real estate implications of the deal? History tells us to expect market growth, which will increase the need for property valuations and appraisals not just for the new unnamed bank, but for other institutions competing for the same real estate opportunities. If you’re a financial institution within the new Bank’s combined footprint and are not considering how this will affect your current appraisal or valuation process, you should. In anticipation of the merger, it’s definitely in the best interest of competing banks or credit unions to ensure they’re using an efficient valuation or collateral due diligence process so they can stay competitive with turn times on loan originations.
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