First Horizon to buy 30 branches as part of BB&T-SunTrust divestiture

First Horizon National in Memphis, Tenn., has agreed to buy 30 SunTrust Bank branches in three states.

The $43.7 billion-asset First Horizon said in a press release Friday that it will also gain $2.4 billion in deposits and $410 million in loans. It will pay a 3.4% deposit premium in a deal that is expected to close in the first quarter.

BB&T and SunTrust had to divest the branches in connection with their proposed $28.2 billion merger. The move is a big step toward securing the final regulatory approvals as the companies aim to close their deal by the end of this year.

The Justice Department noted in a separate press release that the planned sale would be the biggest merger-related branch divestiture in more than a decade. As a result of the divestitures, the agency said it would advise the Federal Reserve and the Federal Deposit Insurance Corp. that it will not challenge the merger.

Andrew Harrer/Bloomberg

“This announcement marks another significant and required step toward” completing the deal, Kelly King, BB&T’s chairman and CEO, said in the First Horizon release. “We look forward to working with First Horizon to ensure a smooth transition.”

The divestiture increases the likelihood that BB&T will close the deal this year, Stephen Scouten, an analyst at Sandler O'Neill, wrote in a note to clients.

"We see a fourth-quarter deal close as highly probable," Scouten said. "Once the company receives the Fed approval it will look to close the deal on the first Friday after the 15-day waiting period. A November close is possible now, but we view December as the more likely scenario."

First Horizon will gain scale in the North Carolina cities of Chapel Hill, Durham and Winston-Salem, where two-thirds of the branches are located. The other branches are dispersed across Georgia and Virginia. The company said it expects to keep all SunTrust employees at the acquired branches.

“We look forward to working with BB&T and SunTrust to design a seamless onboarding experience,” Bryan Jordan, First Horizon’s chairman and CEO, said in the release.

“First Horizon is recognized in the industry for its outstanding customer service and commitment to a positive culture,” SunTrust Chairman and CEO Bill Rogers said in the release. “We are pleased to have found a buyer that will retain the jobs of talented teammates and continue to foster the strong client relationships we have established in these branches.”

The branch deal came days after First Horizon announced it had agreed to merge with Iberiabank in Lafayette, La.. That deal would create a $75 billion-asset regional bank across the Southeast.

Morgan Stanley and Baker, Donelson, Bearman, Caldwell & Berkowitz advised First Horizon on the branch deal. RBC Capital Markets; SunTrust Robinson Humphrey; Wachtell, Lipton, Rosen & Katz; and Sullivan & Cromwell advised BB&T and SunTrust.