What Truist pressure? Regionals insist they're in no rush to merge

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The BB&T-SunTrust closing proved that big-bank mergers can get done in today’s regulatory environment, but top executives of several large regional banks gave no hint Tuesday that they plan to explore similar deals or feel any pressure to do so.

Whole-bank acquisitions are disruptive, expensive and can distract from a good strategic plan, officials at Citizens Financial Group, Regions Financial and KeyCorp said Tuesday at a Goldman Sachs conference in New York. They were responding to questions about their M&A outlook just days after BB&T and SunTrust completed their merger, forming the $470 billion-asset Truist Financial to be based in Charlotte, N.C.

“The degree of difficulty of bank M&A, I think, is sometimes underestimated,” said Chris Gorman, president and chief operating officer of the Cleveland-based Key. Gorman will succeed CEO Beth Mooney when she retires in May; he has been widely credited as an instrumental leader in the bank’s integration of First Niagara in Buffalo, N.Y., which Key bought in 2016.

The February announcement that BB&T and SunTrust would merge to form the sixth-largest U.S. bank set off speculation that a wave of other mergers could follow. But while there have been a number of deals in the intervening months involving community or midsize banks, larger regionals have shown little interest in combining to preserve a competitive edge.

Recent low- and no-premium deals — like First Horizon-Iberiabank — may have changed the calculus a bit for the $129 billion-asset Regions, conceded President and CEO John Turner, reiterating comments he made last month. But Turner said that the Birmingham, Ala., bank would likely be better served by focusing primarily on its strategic plan. That, in turn, could help boost Regions’ stock and put it in a better position to buy another bank later down the road, he said.

“Our focus needs to be on executing our plan, getting better at what we do, densifying our business and markets [where] we have a current presence and continue to build our business,” Turner said. “We think there's a tremendous opportunity to get better just through better execution and continuous improvement, and that's really our focus.”

Nonbank deals are a different story. Regions executives indicated they could be interested in a nonbank transaction, such as a wealth management firm or mortgage servicing rights. Key’s Gorman discussed nonbank acquisitions Key has already made, like the digital student lender Laurel Road, which specializes in refinancing student loans for doctors and dentists.

Citizens Chairman and CEO Bruce Van Saun said the $164.4 billion-asset bank could be interested in buying another boutique M&A advisory firm that adds fee income. Citizens has made a number of nonbank acquisitions in the past 18 months, including an M&A advisory shop in Atlanta, a wealth management firm in New York and a mortgage servicing firm in Tennessee.

But nonbank deals still have to be an appropriate fit, Van Saun cautioned.

“Culturally, you want to have folks who appreciate what it means to come to our platform and they want to have long-term careers there and benefit their customers from the extra things they can get from being part of Citizens,” he said. “A lot of folks who are interested in selling their firms, they just want the top dollar.”

Van Saun also emphasized Citizens’ investments in technology. While he wouldn’t totally rule out a bank deal, if exactly the right opportunity came along, he said the Providence, R.I., bank simply has other priorities right now.

“We're in a period of massive change in banking: Customer expectation is changing, the way technology exists and delivers is changing rapidly,” Van Saun said. “I think if you get involved in a major merger of equals, it can cause an inward focus at a point where you really need to be outwardly focused. I worry a little bit about that from a timing standpoint.”

Later in the day Curt Farmer, the CEO of Comerica in Dallas, echoed the remarks of other regional executives in addressing speculation that the $3.1 billion deal announced Monday between Texas Capital Bancshares in Dallas and Independent Bank Group in McKinney, Texas, would spark a deal frenzy in the state.

"Nothing has really changed" for the $71.7 billion-asset Comerica, which is focused on growing organically, Farmer said. Deals like its Sterling Bancshares acquisition in 2011 "are probably few and far between."

Big banks got M&A questions at the conference, too.

JPMorgan Chase may consider acquiring, or partnering with, a technology company, Chief Financial Officer Jennifer Piepszak said.

Noting that JPMorgan “obviously can’t buy another depository institution,” Goldman Sachs analyst Richard Ramsden asked if JPMorgan might consider acquiring a tech-related company.

Piepszak responded that JPMorgan’s July deal for the health care payments provider InstaMed offers an example of the type of acquisition that might work.

“Wholesale payments, I think, is a good example,” she said. “InstaMed … helps us fill out the gap in health care … which really helps us accelerate our growth in small business in wholesale payments.”

When JPMorgan executives analyze where the company has gaps, it considers whether it should build the business line itself, make an acquisition or form a partnership, Piepszak said.

“In some cases, it just makes more sense, for a number of different reasons, to do an acquisition or partner,” Piepszak said.

Andy Peters and Jon Prior contributed to this article.

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M&A Regional banks Citizens Financial Regions Bank KeyCorp Truist Financial BB&T SunTrust