The third- and-seventh-largest banks that make loans and take deposits in South Carolina are combining as they seek to gain heft and accelerate their spending on digital investments.
The sale of SunTrust Banks to BB&T Corp. announced Thursday will result in a new name as the big regional lenders merge operations.
The Southeast companies said that their marriage would create the sixth-largest U.S. bank based on a projected $442 billion in loans and other assets and $324 billion in customer deposits.
It will serve more than 10 million households.
The merged financial services giant will be based in Charlotte and will keep a community banking center in BB&T's hometown of Winston-Salem. It also will maintain a wholesale operation in Atlanta, where SunTrust is headquartered.
The board and management will be split between the two existing banks in what's being called "a merger of equals."
The all-stock deal valued at $28 billion is expected to close by the end of the year. It's the largest buyout for the banking industry since the last recession a decade ago.
"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 chief executive officer Kelly King said in a prepared statement.
The banks have about 740 branches within two miles of each other, or nearly a quarter of their total brick-and-mortar locations. During a conference call, King said the lenders will be "careful and methodical" about which offices are closed as they look to eliminate overlapping expenses and other redundancies.
The deal underscores the consolidation wave that's been reshaping the industry for years by shrinking the number of U.S. financial institutions, namely smaller lenders without deep pockets.
Deals involving big banks came to a halt after the 2008 financial crisis, partly because regulations put in place by the Obama administration made mergers and acquisitions more difficult. The Trump administration and Congress have taken more of a hands-off approach.
"The regulatory environment is much easier for something of this size to happen," said Brian Klock, an analyst with KBW.
"The technology spending is one of the reasons why I think you're going to see these mergers continue on a go-forward basis," RBC Capital Markets analyst Gerard Cassidy said on CBNC's "Squawk Box" early Thursday.
In South Carolina, BB&T is the third-largest bank — behind No. 1 Wells Fargo and No. 2 Bank of America — with about 100 branches and $8.4 billion in deposits in the Palmetto State, according to the latest federal data from July 1.
Branch Banking & Trust expanded to the Lowcountry in 1995 and relocated its regional headquarters to downtown Charleston from Florence in 2006.
SunTrust entered the South Carolina market in 2004 when an acquisition gave it a small Upstate footprint. It set its sights on the Charleston region about a year later. It now has about 40 offices and $3 billion in deposits around the state.
BB&T shareholders will own about 57 percent of the merged bank. King will be chairman and CEO of the combined bank until Sept. 12, 2021, and then become executive chairman for six months. He'll stay on the board until late 2023.
Bill Rogers, chairman and CEO of SunTrust, will be president and chief operating officer of the new bank until Sept. 12, 2021. He will then become CEO for six months, after which he'll add board chairman to his business card.
When Rogers was in Charleston last September, he told The Post and Courier that SunTrust was doing fine on its own and that it wasn't interested in adding market-share through acquisitions.
“I think we actually can do the things we need to do organically,” he said.
Rogers has since changed his mind, according to a statement Tuesday.
"With our geographic position, enhanced scale and leading financial profile, these two companies will achieve substantially more for clients, teammates, associates, communities, and shareholders than we could alone," he said.
BB&T has about 14 branches in the Charleston region while SunTrust operates 10, according reports filed with the FDIC.