BB&T, SunTrust Still Grapple With Name Game -- WSJ

By Allison Prang 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 19, 2019).

In the two months since announcing the largest bank deal since the financial crisis, BB&T Corp. and SunTrust Banks Inc. leaders have sought to sort out the kinks that can sometimes complicate combinations.

BB&T Chief Executive Kelly King said on Thursday that the banks' leadership teams have met weekly and are working to merge the two cultures and retain employees.

Integration leaders have also been appointed for different functions and businesses. He said few associates have left so far.

"We're not taking anything for granted and we're not expecting our associates to just line up and be good soldiers," Mr. King said.

"I know we've got to work on our fist bumping," he joked. "We've been practicing that."

Mr. King said that BB&T expects to reveal the combined company's new name late in the current quarter.

The Federal Deposit Insurance Corporation and the Federal Reserve Board are holding their public meetings this month and next month and the two companies are going to submit their stress test and joint capital plan next month, he said.

BB&T also said Thursday that the Federal Reserve terminated a 2017 cease-and-desist order related to alleged deficiencies in its anti-money-laundering controls. In June, the FDIC and the North Carolina Office of the Commissioner of Banks terminated a similar order.

Shareholders are expected to vote on the deal, which has been valued at $28.2 billion, early in the third quarter. Together, BB&T and SunTrust would become the sixth largest retail bank in the country. A large reason for the deal is to be able to scale more with technology.

The companies expect to trim $1.6 billion in costs from their combined operations.

Given the overlap that BB&T, based in Winston-Salem, N.C., and SunTrust, based in Atlanta, have in their branch networks -- approximately 740 of the locations are within a couple of miles of one another -- a large amount of those cost savings would likely come from branch closures.

Both SunTrust and BB&T reported first-quarter results before the market opened Thursday. Profit rose slightly at BB&T Corp. but fell at SunTrust Banks Inc. in the first quarter, as both regional banking firms recorded merger-related expenses ahead of combining their operations.

BB&T's profit rose 0.5% to $792 million in the quarter that ended in March, compared with the first quarter a year earlier. Earnings per share were 97 cents, up from 94 cents a share. Analysts polled by Refinitiv were expecting earnings of $1.03 a share.

The company said it had $80 million in merger and restructuring-related charges. BB&T reported adjusted earnings, which excludes those charges, of $1.05 a share. Analysts were still expecting $1.03 a share.

At SunTrust, profit fell 9.8% to $580 million. SunTrust reported earnings of $1.24 a share, down from $1.29 a share. Analysts were expecting $1.30 a share.

SunTrust said it had $45 million in merger-related costs, or 9 cents a share.

Total taxable-equivalent revenue at BB&T rose 3% to $2.92 billion, slightly less than analysts anticipated. Both net interest income and noninterest income rose.

At SunTrust, fully taxable equivalent revenue rose 4.2% to $2.35 billion, which beat estimates from analysts. Net interest income rose and noninterest income fell.

BB&T shares fell 1.3% on Thursday, while SunTrust shares were down 1.1%.

Write to Allison Prang at [e-mail]

(END) Dow Jones Newswires

April 19, 2019 02:47 ET (06:47 GMT)

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