Citizens looks to poach BB&T-SunTrust talent, but should expect a fight

Count Citizens Financial Group among the banks hoping to pick off talent and clients when the merger between SunTrust and BB&T closes later this year.

While the Providence, R.I., bank has a limited retail presence in BB&T and SunTrust’s markets, it has been steadily building its commercial business in the Southeast. The $161 billion-asset Citizens has already recruited one team of commercial bankers away from SunTrust, and its top commercial banker said Tuesday that he expects the merger — the industry’s largest in more than a decade — to lead to more banker defections.

“I’ve been through nine mergers in my career and they’re disruptive. There will be opportunities,” Don McCree, vice chairman and head of commercial banking, said at the Morgan Stanley Financial Services Conference in New York.

But BB&T Chairman and CEO Kelly King has a message for bankers looking to poach talent from the combined company: Not so fast.

Speaking at the same conference, King said he’s well aware other banks will be looking to capitalize on any disruption, but he said they are mistaken if they think it will be easy.

Disruption “happens if the acquiring institution makes a mess of it, and we are not going to make a mess of it,” said King, who will serve as chairman and CEO of the combined company. “We understand what the game is, and we are redoubling our own efforts in terms of our outreach with our clients and most importantly, our associates. If your associates are happy and engaged, it’ll turn out fine.”

Several banks in the Southeast and mid-Atlantic have said that they intend to go after customers and bankers that might be looking to leave BB&T-SunTrust when that merger closes. W. Scott McSween, the CEO at Burke & Herbert Bank & Trust in Alexandria, Va., told American Banker this week that “there’s bound to be fallout” from a merger as large as this one and that he expects his $3 billion-asset bank to benefit from it.

Citizens was eyeing expansion in the Southeast even before BB&T and SunTrust announced their megamerger, which will create the nation’s sixth-largest bank, with roughly $442 billion of assets. It started making serious inroads into Atlanta, SunTrust’s hometown, late in 2016 when it hired Brian Peters and appointed him head of commercial banking in the Southeast. Before he joined Citizens, Peters had been at SunTrust for more than 20 years.

McCree said Tuesday that Citizens has been adding around 300 new clients every year across its footprint, and it’s done so primarily by hiring local bankers in its newer markets. Since 2015, total commercial loans have increased by an average of 7% a year and total commercial deposits have increased by an average of 9% a year.

“They are bringing clients with them, which is one of my goals when I hire people,” he said.

McCree also outlined a number of other strategic investments Citizens has made in its commercial bank.

For example, Citizens is piloting a real-time commercial payments service with a small number of its clients, which McCree likened to “Zelle for business.” While that initiative is still in the very early stages, McCree said customer feedback has been positive so far. He also said that it’s allowed the bank to help companies analyze their cash flows and give advice based on that.

He said the bank has also seen great success with a concierge service it’s implemented for commercial clients. That service gives each customer a single point of contact to navigate their various banking needs and alert them to potential outages in services.

Citizens has also made small, selective acquisitions that can help boost its fee income, such as its recent acquisition of an Atlanta-based M&A advisory firm, Bowstring Advisors. McCree said he considered about 10 other similar deals in the past year, but ultimately did not pursue them because he felt they weren’t a cultural fit.

While some commercial clients have been hesitant to make capital expenditures, usually because of uncertainty over interest rates or trade, he said that Citizens’ bankers “are reasonably sanguine” about the economy.

Still, McCree said the bank is keeping an eye on a few areas of concern, mostly in real estate.

For example, Citizens has de-emphasized multifamily real estate lending over fears about overbuilding in that sector. McCree said the bank has heard increasing concerns from clients about certain multifamily projects being done by “second- and third-tier” sponsors and banks.

He added that the bank has recently favored industrial real estate projects instead and has no intention of growing its commercial real estate portfolio above its current level. At March 31, commercial real estate loans accounted for about 23% of the bank’s total commercial loans.

“We just don’t like some of the opportunities we’re seeing so we’re not going to chase them,” he said. “There’s just a little bit at the edge that is beginning to worry us.”