The proposed BB&T Corp. and SunTrust Banks Inc. merger of equals would create the nation’s sixth-largest bank.

But what does that mean in terms of competitiveness, market share and employees?

BB&T has had a goal since its seminal $2.2 billion merger of equals in 1995 with Southern National Corp. of Winston-Salem of being one of the top five banks in terms of deposits in every state it serves.

Based on 2018 data from the Federal Deposit Insurance Corp., BB&T has a top-five deposits market share in Georgia (fifth), Kentucky (fourth), North Carolina (third), South Carolina (third), Virginia (fifth) and West Virginia (first).

By comparison, SunTrust is in the top five in Florida (third), Georgia (first), North Carolina (fifth), Tennessee (third) and the District of Columbia. (fifth).

Combined, the banks would remain first in Georgia and West Virginia, move up to first in Virginia, and rise to second in Maryland and North Carolina.

“We will be in many of the most highly attractive markets in the country, with a top-three share in eight states,” said Kelly King, BB&T’s chairman and chief executive., who would stay in those roles through Sept. 12, 2021. The combined bank, if approved, would have a presence in 17 states and the District of Columbia.

The combined bank also would be No. 1 in the metro areas of Winston-Salem; Greensboro; Atlanta; Knoxville, Tenn.; Orlando, Fla.; and Virginia Beach, Va.. It would be No. 2 in the metros of Durham; Raleigh; Richmond, Va.; Tampa, Fla.; and Washington, D.C.

As a selling point for the merger, the banks cited the fact that from 2019 to 2014, the population in the new bank’s territory is projected to increase more than in any other bank’s, including Wells Fargo & Co.

Branch closings

The banks expect to gain $1.6 billion in annual pre-tax cost savings from the merger, about 12.5 percent of their current combined expenses.

Among the major targets for lowering costs are redundant facilities, older information-technology systems, shared services, branches and third-party contracting.

For example, BB&T and SunTrust have 740 branches in their current networks — nearly one-fourth of the combined network — that are within 2 miles of each other, including in the Piedmont Triad.

It is likely that most, if not all, of those scenarios will result in a branch closing.

“If you are a client-facing associate, and doing a good job, then your job is assured.” King said, speaking on behalf as well for William Rogers Jr., SunTrust’s chairman and chief executive.

Allison Dukes, SunTrust’s chief financial officer, said the branch consolidation initiative “creates significant opportunity to reshape and modernize our brick-and-mortar footprint.”

“Despite this branch overlap, we expect a low level of deposit divestitures,” Dukes said.

“As we rationalize our branch network, we will maintain the same level of analytical rigor and discipline we have individually shown, which has driven very strong deposit retention rates for both of us,” she said.

Branch for sale?

As was the case when First Union Corp. and Wachovia Corp. integrated, many of the branches that BB&T and SunTrust will close or sell likely will be attractive to regional and community banks, as well as credit unions, both for their physical locations and for the technology infrastructures.

It typically costs between $1 million and $3 million to build a standalone branch from scratch.

“We are actively expanding our physical presence throughout the Triad and would definitely consider any vacated branch locations as part of our planned growth,” said Cathy Pace, the president and chief executive of Allegacy Federal Credit Union.

Allegacy recently took over and remodeled a former Bank of America Corp. branch in Bermuda Run and plans to open its first High Point branch in the fall.

“Allegacy is always looking for ways to better serve our member-owners and providing convenient locations is one way we enhance our member experience,” Pace said.

Truliant Federal Credit Union said in a statement that “we plan to keep a close eye on lease opportunities created as part of the market overlap in branches created by the merger.”

“We want to grow in markets where it makes sense. We want to be close to our members, grow our member base and pick up attractive real estate to serve our members most effectively,” Truliant said.

“Branches are important. They aren’t going away. People value conversations to help them with their financial lives and to make big decisions,” the statement said.

First Union and Wachovia

The key structural elements of the merger are Charlotte gaining the headquarters, Winston-Salem the community banking and retail divisions, and Atlanta the corporate and investment, or wholesale, banking division.

That likely means there will either be a shuffling of employees following their department sectors or transitioning to jobs in the sectors being retained where they work now.

“Our strengths in the wholesale business are probably pretty balanced, and we’re really strong on the upper middle market, large corporate side,” Dukes said.

“BB&T is particularly strong in the small business, smaller commercial side. So it’s very complementary in nature,” Dukes said.

She said that where both banks have financial dealing with the same large clients, “the great news is we have a much larger balance sheet and we have the opportunity to have larger relationships with these clients.

“We don’t see that as a real challenge,” Dukes said. “We frankly see it as a bigger opportunity to create deeper relationships with these clients across a broader suite of capabilities.”

The Winston-Salem area lost 1,300 jobs to Charlotte between 2001 and 2003 with the First Union takeover of Wachovia.

In some instances, former Wachovia employees went to work for smaller banks and credit unions, found new financial-services jobs, opened their own businesses or left the area to find work of a similar level and high pay.

It’s likely that local BB&T and SunTrust employees whose jobs go away will find similar work even with there being fewer banks in the area than in 2003.

“We are always looking for exceptional talent and make it a point to hire locally,” Truliant said.

Corporate cultures

In the typical bank deal, the acquiring bank loses between 5 percent and 15 percent of its deposits as customers remove their accounts, primarily because they either prefer a locally based financial institution or a smaller bank.

“We are calling our top shareholders, our top clients,” King said. “We are in motion, making sure everybody understands that this is positive for everybody. This is great for our clients. It is fantastic. There is no other institution that can go to one of our clients and offer something as good as what we are offering.

“We will have other prospects calling us, and we will be seeing other prospects and growing our business,” he said.

Competing banks also tend to ratchet up their employee-recruitment efforts during the uncertainty of the new bank’s decisions on which employees to keep and in what positions.

When asked about employee attrition, King said he expects the combined bank to experience little within its markets.

“The challenge here is what type of culture you have, what type of engagement your associates have, and whether you have an attractive place for people who want to work,” he said. “We both have really, really good cultures. Combined, our cultures, I believe, will be even better. We have really strong benefit programs.”

King said he recognizes that employees “will get calls from others.”

“Of course, they’d like to try to have our people, but I’m not aware of any other competitor out there that offers the kind of current and future opportunity for our associates that we offer especially combined.

“So, my question is why would anyone logically think anyone would leave us to go to someone else who’s not as good?”

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rcraver@wsjournal.com 336-727-7376 @rcraverWSJ

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