We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Zacks Analyst Blog Highlights: BB&T, SunTrust, Bank of America and Wells Fargo
Read MoreHide Full Article
For Immediate Release
Chicago, IL –February 8, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: BB&T Corporation ,SunTrust Banks (STI - Free Report) , Bank of America (BAC - Free Report) and Wells Fargo (WFC - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Blockbuster Merger – BB&T/SunTrust – to Create 6th Biggest Bank
BB&T Corporation and SunTrust Banks have announced an agreement to merge, which will create the sixth-largest commercial bank in the United States (in terms of assets and deposits). The all-stock deal, expected to close in the last quarter of the year, is valued at $66 billion.
The combined company will have nearly $442 billion in assets, $301 billion in loans, and $324 billion in deposits and will serve more than 10 million households in country, with leading market share in several attractive, high-growth markets.
The transaction still requires approvals of shareholders of both the banks and customary regulatory consent.
Since the announcement, shares of both BB&T and SunTrust has been moving north.
“Merger of Equals” Deal Details
Under the terms of the agreement, shareholders of SunTrust will receive 1.295 shares of BB&T for each SunTrust share they own. Besides, BB&T shareholders will own nearly 57% and SunTrust shareholders will own roughly 43% of the combined company, which will be based in Charlotte, NC. The combined bank will maintain the Community Banking Center in Winston-Salem, NC and the Wholesale Banking Center in Atlanta, GA.
In a reflection of the “merger of equals” deal, the combined company will operate under a new name and brand (to be determined prior to closing). Further, the new bank's 14 board of directors will be evenly split between the two companies.
Kelly S. King, Chairman and CEO of BB&T, will serve as Chairman and CEO of the combined company till Sep 12, 2021, after which he will be Executive Chairman of both entities till Mar 12, 2022.
William H. Rogers, Jr., Chairman and Chief Executive Officer of SunTrust will serve as President and Chief Operating Officer of the combined company till Sep 12, 2021, after which he will become CEO of the combined bank. Further, on Mar 12, 2022, he will also become Chairman and CEO of the combined company.
An Accretive Deal
The transaction is expected to result in one-time pre-tax merger expense of $2 billion. Also, it is expected to generate an internal rate of return of nearly 18%.
Additionally, the deal is expected to lead to revenue synergies, though the same has not been included in the deal. The merger will also lead to pre-tax cost savings of $1.6 billion (net of investments), which will be fully realized by 2022. This represents approximately 12.5% of combined expenses.
Further, the merger will result in earnings accretion for the shareholders of both the companies. In 2021, GAAP and cash earnings per share (EPS) accretions are projected to be approximately 13% and 17%, respectively, for BB&T shareholders.
For SunTrust shareholders, GAAP and cash EPS accretions are expected to be nearly 9% and 16%, respectively, in 2021. Moreover, the shareholders of SunTrust will receive a 5% hike in their dividend following consummation of the transaction based upon each bank's current dividend per share.
Notably, share repurchases have been suspended by both companies till the closure of the transaction.
Our Take
Following the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act in May last year, the banks with assets between $100 billion and $250 billion will be eventually exempted from being labeled as systemically important financial institutions (SIFI). This has created a unique opportunity for such companies.
Further, lower corporate tax rate freed up capital, which, along with lesser regulations, was expected to lead to a wave of M&As in the banking industry.
The merger between BB&T and SunTrust seem to be driven by these factors. Though the combined company will cross the SIFI threshold, it will lead to increased growth prospects and creation of shareholder value.
Further, the combined company will likely give tough competition to some of the nation’s biggest banks including Bank of America and Wells Fargo in terms of deposits per branch.
Over the past year, shares of BB&T and SunTrust have lost 2.8% and 3.4%, respectively. This compares with industry’s decline of 7.7%.
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
The Zacks Analyst Blog Highlights: BB&T, SunTrust, Bank of America and Wells Fargo
For Immediate Release
Chicago, IL –February 8, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: BB&T Corporation ,SunTrust Banks (STI - Free Report) , Bank of America (BAC - Free Report) and Wells Fargo (WFC - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
Blockbuster Merger – BB&T/SunTrust – to Create 6th Biggest Bank
BB&T Corporation and SunTrust Banks have announced an agreement to merge, which will create the sixth-largest commercial bank in the United States (in terms of assets and deposits). The all-stock deal, expected to close in the last quarter of the year, is valued at $66 billion.
The combined company will have nearly $442 billion in assets, $301 billion in loans, and $324 billion in deposits and will serve more than 10 million households in country, with leading market share in several attractive, high-growth markets.
The transaction still requires approvals of shareholders of both the banks and customary regulatory consent.
Since the announcement, shares of both BB&T and SunTrust has been moving north.
“Merger of Equals” Deal Details
Under the terms of the agreement, shareholders of SunTrust will receive 1.295 shares of BB&T for each SunTrust share they own. Besides, BB&T shareholders will own nearly 57% and SunTrust shareholders will own roughly 43% of the combined company, which will be based in Charlotte, NC. The combined bank will maintain the Community Banking Center in Winston-Salem, NC and the Wholesale Banking Center in Atlanta, GA.
In a reflection of the “merger of equals” deal, the combined company will operate under a new name and brand (to be determined prior to closing). Further, the new bank's 14 board of directors will be evenly split between the two companies.
Kelly S. King, Chairman and CEO of BB&T, will serve as Chairman and CEO of the combined company till Sep 12, 2021, after which he will be Executive Chairman of both entities till Mar 12, 2022.
William H. Rogers, Jr., Chairman and Chief Executive Officer of SunTrust will serve as President and Chief Operating Officer of the combined company till Sep 12, 2021, after which he will become CEO of the combined bank. Further, on Mar 12, 2022, he will also become Chairman and CEO of the combined company.
An Accretive Deal
The transaction is expected to result in one-time pre-tax merger expense of $2 billion. Also, it is expected to generate an internal rate of return of nearly 18%.
Additionally, the deal is expected to lead to revenue synergies, though the same has not been included in the deal. The merger will also lead to pre-tax cost savings of $1.6 billion (net of investments), which will be fully realized by 2022. This represents approximately 12.5% of combined expenses.
Further, the merger will result in earnings accretion for the shareholders of both the companies. In 2021, GAAP and cash earnings per share (EPS) accretions are projected to be approximately 13% and 17%, respectively, for BB&T shareholders.
For SunTrust shareholders, GAAP and cash EPS accretions are expected to be nearly 9% and 16%, respectively, in 2021. Moreover, the shareholders of SunTrust will receive a 5% hike in their dividend following consummation of the transaction based upon each bank's current dividend per share.
Notably, share repurchases have been suspended by both companies till the closure of the transaction.
Our Take
Following the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act in May last year, the banks with assets between $100 billion and $250 billion will be eventually exempted from being labeled as systemically important financial institutions (SIFI). This has created a unique opportunity for such companies.
Further, lower corporate tax rate freed up capital, which, along with lesser regulations, was expected to lead to a wave of M&As in the banking industry.
The merger between BB&T and SunTrust seem to be driven by these factors. Though the combined company will cross the SIFI threshold, it will lead to increased growth prospects and creation of shareholder value.
Further, the combined company will likely give tough competition to some of the nation’s biggest banks including Bank of America and Wells Fargo in terms of deposits per branch.
Over the past year, shares of BB&T and SunTrust have lost 2.8% and 3.4%, respectively. This compares with industry’s decline of 7.7%.
Currently, both BB&T and SunTrust carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.