Suspense builds on new brand for BB&T-SunTrust
SunTrust CEO Bill Rogers and BB&T CEO Kelly King considered “every alternative possible” before ultimately deciding to completely rename the combined entity they will create when their merger finally closes.
Both companies have strong brands in their respective markets, but both CEOs also agreed that they needed to “minimize winners and losers” in the deal. And the best way to do that, Rogers said, is to totally rebrand the new organization.
“I can tell you every combination of SunTrust and BB&T you can imagine,” Rogers said Thursday at the Bernstein Strategic Decisions Conference in New York. “Nobody is more married to our two brands than Kelly and myself. We spent our entire professional careers in our companies. The fact that we were both willing to put those in the middle of the table I think ought to be a pretty strong symbol of how important we feel about this new opportunity.”
Rogers said the merger was proceeding according to schedule, while he declined to commit to a hard deadline to reveal the new name. Both companies have filed the necessary paperwork with their regulators, submitted information to the Department of Justice and met with the Federal Reserve and Federal Deposit Insurance Corp., as well as community groups, he said.
First announced in February, the merger agreement between SunTrust Banks in Atlanta and BB&T in Winston-Salem, N.C., is the biggest bank deal in 15 years. With $442 billion in combined assets, it would be the sixth-largest U.S. bank. Provided regulators approve the deal, it is scheduled to close in the fourth quarter.
Executives of the two companies have previously said they expect to hold shareholder votes during the third quarter this year and that they plan to reveal the new name for the combined bank by the end of June.
Rogers also reiterated the targeted efficiency ratio of 51% for the new company. In the first quarter, SunTrust reported an efficiency ratio of 63.4%, while BB&T’s was 61%. He said the new company will be able to achieve that much lower target because while BB&T and SunTrust have complementary businesses, they also have “lots of overlap on the places where you achieve efficiency.”
Rogers did not say how quickly that ratio could be reached, but the banks’ presentation about the deal in February suggested it would be 2022, the year its estimated pretax cost savings of $1.6 billion would fully kick in.
Both companies have worked hard to stress that the deal is a true merger of equals. That is the rationale behind choosing both a new name and a new headquarters city in Charlotte, N.C.
King will be the chairman and CEO of the new organization for its first two years of operation, and Rogers will take over as chairman and CEO after that. Rogers said Thursday that the leadership team for the new organization is so far pretty evenly split between bankers from both companies.
Both CEOs carefully studied past mergers of equals when planning their deal and wanted to avoid any ambiguity in the process, Rogers said.
“We really want to do it well,” he said. “We want to be the standard-bearers for how to do an MOE extremely, extremely well.”
Meanwhile, King addressed the Operation HOPE Conference on Thursday morning at the Hyatt Regency in Atlanta. He did not mention the SunTrust deal during his prepared remarks or in a brief encounter with reporters after his presentation.
During his 20-minute talk, King said BB&T has partnered with Everfi in Washington to develop a video game aimed at helping public school students learn to read. The game will be distributed to schools nationwide in about 18 months, he said.
“The public school system today, I’m sorry to say, is failing,” King said. “Two-thirds of kids in the third grade cannot read. This is unacceptable.”
King previously disclosed the bank’s development of the game at an RBC Capital Markets conference in March. King said at the time that BB&T would spend about $6 million to develop the game.
The remainder of King’s presentation dealt with the rapid technology innovations that are changing society and the economy, and his ideas about better handling life’s issues and improving society.
“I believe we are all looking for a sense of happiness and a sense that my life matters and that we are making a difference,” King said.