BB&T to Buy National Penn in Pennsylvania for $1.8B
The Pennsylvania company is keen on buying a bank with $1 billion or more in assets to soundly cross a threshold that would bring with it more regulatory scrutiny.
BB&T has received regulatory approval for its acquisition of Bank of Kentucky Financial, with the Federal Reserve providing a blueprint for approvals of future deals.
Kelly King, who is close to closing BB&T s biggest acquisition to date, told analysts that he could look to add up to $20 billion in assets next year through acquisitions. Management also used a conference call to emphasize the ongoing importance of organic growth.
BB&T in Winston-Salem, N.C., has agreed to buy National Penn Bancshares in Allentown, Pa.
The $210 billion-asset BB&T said in a press release issued late Monday that it will pay $1.8 billion, or $13 a share, in cash and stock for the $9.6 billion-asset National Penn. The deal is expected to close by mid-2016.
The acquisition provides a tremendous opportunity to strengthen our franchise in Pennsylvania and continue building the scale necessary to operate efficiently and with high quality service," Kelly King, BB&Ts chairman and chief executive, said in the release. "National Penn is an attractive, well-run company with strong management.
National Penn, as of June 30, had $6.7 billion in deposits, $6.2 billion in loans and nearly 125 branches in Pennsylvania, Maryland and New Jersey.
BB&T has been an aggressive consolidator in recent months, buying dozens of Texas branches from Citigroup, the $1.9 billion-asset Bank of Kentucky Financial and the $19 billion-asset Susquehanna Bancshares in Lititz, Pa.
BB&T has long maintained a strategic goal of obtaining 5% deposit share in the markets it serves, and King made it clear during a conference call last month that he was on the prowl for more large deals.
"There are a number of institutions let's just say in the $5 billion to $20 billion range that I think are considering their strategic alternatives and may present some availabilities," King said at the time.
National Penn fits squarely in that range and, based in the latest data from the Federal Deposit Insurance Corp., would boost BB&Ts deposit market share in Pennsylvania to 4.8%. (The only banks with more deposits in the state would be PNC Financial Services Group, Wells Fargo and Citizens Financial Group.)
By closing in on $10 billion in assets, National Penn was set to cross a regulatory threshold that would have ushered in mandatory stress testing and caps on interchange fees. As a result, management said earlier this year that it was looking for a large acquisition. And National Penn, which bought TF Financial in October, was still sitting on roughly $400 million of excess capital.