What BB&T, SunTrust have spent on their merger efforts

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BB&T in Winston-Salem, N.C., and SunTrust in Atlanta reported mixed quarterly results as they moved forward on their merger plans.

The companies combined for $125 million in merger-related expenses in the first quarter.

The $228 billion-asset BB&T saw a slight increase in earnings, to $749 million, as loan growth and a wider margin offset its share of the merger costs and lower mortgage income.

At the $220 billion-asset SunTrust, quarterly profit fell by 9.5% to $554 million. A higher loan-loss provision, merger-related expenses and a decline in mortgage volume offset strong lending and a slightly wider margin.

The companies, which in February announced an agreement to merge, also provided a timetable for certain milestones of the process. They plan to announce the combined company’s name by late June; shareholder votes should be held early in the third quarter.

BB&T’s revenue increased by 3% to $2.9 billion.

Net interest income increased by 4% to $1.7 billion. Total loans rose by 2% to $149 billion, while deposits increased by 2% to $160 billion. The net interest margin widened by 7 basis points to 3.51%.

The loan-loss provision fell by 5% to $177 million.

Noninterest income increased by 2% to $1.2 billion. Higher income from insurance and deposit charges offset declines in mortgage banking and investment advisory services.

BB&T’s noninterest expenses increased by 5% to $1.8 billion, including $80 million in merger-related costs. Personnel expense rose by 5% to $1.1 billion, while regulatory charges dropped off significantly to $18 million.

Revenue at SunTrust increased by 4% to $2.3 billion.

Net interest income rose by 7% to $1.5 billion. Average loans increased by 5% to $74.8 billion, with gains made in most categories. Average deposits rose by 3%, driven by growth in certificates of deposit. The net interest margin widened by 2 basis points to 3.22%.

The loan-loss provision jumped to $153 million from $28 million a year earlier, which the company attributed to “strong loan growth.” Net charge-offs increased by 23% to $97 million, while nonperforming loans fell by 27% to $522 million.

SunTrust’s noninterest income fell by 1.5% to $784 million, though the first quarter of 2018 included a $23 million gain tied to a fintech investment. Mortgage production volume fell by 37%, while application volume fell 24%.

Noninterest expense increased by 5%, to $1.5 billion, including $45 million in merger-related costs. SunTrust noted that it had closed 84 branches in the last year.

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