Talent, deposits up for grabs after BB&T-SunTrust deal

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BB&T's pending purchase of SunTrust will present opportunities for other banks.

Deposits, branches, lenders and clients will be up for grabs as the regional powers seek regulatory approval and subsequently integrate their $28 billion merger. The big question centers on which banks will be able to capitalize on the largest bank merger agreement in more than decade.

Regional and community banks "should most certainly be excited" about a rare opportunity to expand their operations, said Jonathan Hightower, a lawyer at Bryan Cave Leighton Paisner in Atlanta.

BB&T and SunTrust have already announced plans to divest nearly $1.4 billion in deposits. The companies also noted that nearly a quarter of their roughly 3,100 branches are within two miles of each other, signaling the potential for closures.

At the same time, there should be lenders who are keen to move to a smaller institution, industry observers said.

"Where there are branch opportunities, we're open to understanding them," said Paul Murphy, chairman and CEO of Cadence Bancorp. in Houston, which recently bought State Bank Financial in Atlanta. "If there are bankers who are dislocated, we're open to looking at ways to strengthen our team."

Banks like Cadence that are based in the Southeast likely have the most opportunity. The entity resulting from the BB&T-SunTrust deal will have the highest deposit concentrations in Georgia, Virginia and North Carolina. The company would also have a large amount of deposits in Florida.

Selling deposits to one bank is typically less complicated than trying to sell to numerous buyers, industry observers said. Given that the combined company’s operations will cover 17 states and Washington, D.C., the management team could opt to bundle and sell deposits by market, said Rob Klingler, a lawyer at Bryan Cave Leighton Paisner.

Potential buyers with the ability to take deposits in more than one market could have an advantage, Klingler said.

BB&T and SunTrust would likely sell deposits to smaller banks because they are viewed as less of a competitive threat than regionals, said Chris Marinac, an analyst at FIG Partners.

The combined bank, which is to be rebranded, could let some of redundant branches sit idle rather than sell them, said Lee Burrows, CEO of Banks Street Partners. The company could transfer the deposits and sell the real estate at a later time.

“Some of the markets both of those banks are in have seen incredible growth,” Burrows said. “A real estate guy could buy and tear down the [branch], so the upside on the sale of future real estate could be phenomenal ... particularly in legacy markets with a tremendous amount of growth.”

Atlanta, which has been SunTrust's home for nearly 130 years, could be a battleground market. BB&T and SunTrust have identified Charlotte, N.C., as their new headquarters.

The timing is great for United Community Banks in Blairsville, Ga. The $12.5 billion-asset United Community is aggressively expanding around Atlanta.

"We've been talking to people in both banks,” said Rich Bradshaw, United's chief banking officer. “In the field, there's concern, which is a byproduct of most big acquisitions. … We're going to reach out to top candidates, people we think will be good members of the United Community team."

Some bankers believe it is too early how other banks could benefit from the merger.

"One of the opportunities may be in markets where they have significant amount of overlap and some required regulatory divestitures," said Bryan Jordan, chairman, president and CEO of First Horizon National in Memphis, Tenn. "There could be opportunity for some of us that have overlap, in terms of footprint or market, to get involved in a bidding process but that's way down the line."

BB&T and SunTrust have already tried to get ahead of competitors. Kelly King, BB&T's chairman and CEO, and Bill Rogers, his counterpart at SunTrust, filmed an employee video touting the deal, which included a fist bump between the executives. Materials were sent to employees answering questions and providing advice on what to tell clients.

King, for his part, expressed confidence that the company will retain those who are recruited by competitors.

“We both have really, really good cultures,” King said during a Thursday conference call to discuss the deal.

“Combined, our cultures will be even better," King added. "We have really strong benefit programs. Our people 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. And so my question is why would anyone leave us to go to someone else who's not as good?”

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