Wednesday, November 12, 2014

BB&T to acquire Pennsylvania bank for $2.5B

BB&T Corp. said Wednesday it is acquiring Pennsylvania's Susquehanna Bancshares, a move that increases the regional lender's footprint in the mid-Atlantic region.

Winston-Salem-based BB&T said the cash-and-stock deal is worth approximately $2.5 billion. It still needs approval from regulators and Susquehanna shareholders.

The deal also marks BB&T's second acquisition of another lender in as many months. It's the latest example of growth for BB&T, which earlier this year entered into agreements to buy branches in Texas from Citibank.

It would be one of the largest acquisitions in the banking industry since the financial crisis. According to data company SNL Financial, it ranks as the sixth-largest whole bank deal since 2009 and the second-largest since 2013.

BB&T said the purchase of the Lititz, Pa., lender will result in the formation of three new banking regions in Pennsylvania and New Jersey, two states in which the bank currently does not have operations.

BB&T said Susquehanna has $18.6 billion in assets, $13.6 billion in deposits and 245 branches in Pennsylvania, Maryland, New Jersey and West Virginia. BB&T currently has about $187 billion in assets.

For some lenders, mergers and acquisitions are an attractive concept. Such growth can, among other things, allow them to spread out regulatory costs that have been rising since the financial crisis.

In an interview with the Observer in September, BB&T CEO Kelly King said regulations put into effect since the crisis, such as those under the Dodd-Frank Act, have slowed bank mergers and acquisitions. But now “sellers are ready to talk,” he said.

The deal is also expected to increase BB&T's costs at a time the lender is trying to lower them.

Its expenses in the third quarter were higher than some analysts expected. BB&T reported $1.6 billion in non-interest expenses, up by $85 million from a year ago. The lender attributed the increase largely to the early elimination of debt.

BB&T cut its headcount companywide by 800 in the third quarter, including an undisclosed figure in Charlotte, as part of an effort to cut expenses.

BB&T said it expects the Susquehanna purchase to result in roughly $250 million in pre-tax merger and integration costs. But BB&T also said it expects to see annual cost savings of about $160 million from the acquisition.

The purchase comes just two months after BB&T Corp. announced a deal to acquire The Bank of Kentucky for about $363 million in stock and cash. That deal marked BB&T’s first acquisition of another lender since it acquired Florida’s BankAtlantic in 2012.

Wednesday's deal also comes after BB&T in September announced plans to buy 41 branches in Texas from Citibank. That announcement came three months after BB&T purchased nearly two dozen Texas branches from Citibank.

BB&T employs roughly 1,900 people in the Charlotte area across various business lines.

It is the third-largest lender by market share in the Charlotte metropolitan area.


morgan smith said...

Susquehanna stockholders will receive 0.253 share of BB&T common stock and $4.05 in cash for each share, BB&T said today in a statement. Based on BB&T’s closing price of $38.33 yesterday, the offer is worth about $13.75 a share, 39 percent above Susquehanna’s $9.90 price yesterday. Calculated using BB&T’s average closing price over the 45 days ended on Nov. 10, the deal is worth $13.50 per share.
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