Consolidation in the banking sector is on rise. Also, regulators are approving mega deals after proper scrutiny.
BB&T Corporation BBT recently received regulatory approvals from the Federal Reserve, the Federal Deposit Insurance Corporation and all state banking regulators to acquire Allentown, PA-based National Penn Bancshares Inc. NPBC. The deal will close in the next few months.
BB&T’s Chairman and Chief Executive Officer Kelly S. King said, “We are very pleased to receive these approvals and excited to move forward with the merger. National Penn is a strategically compelling deal that complements the legacy Susquehanna franchise and presents enormous opportunities to leverage our proven community banking capabilities in these mid-Atlantic markets.”
This stock-and-cash transaction worth $1.8 billion, announced in August, will further expand BB&T’s footprints in the Mid-Atlantic region and enhance its deposit market share in Pennsylvania. As of Sep 30, 2015, National Penn had $9.6 billion in assets, $7.0 billion in deposits, with 124 banking offices in Pennsylvania, New Jersey and Maryland.
As previously announced Scott V. Fainor, president and Chief Executive Officer of National Penn, will become group executive and manage several community banking regions. Further, BB&T plans to create a fourth community banking region for eastern Pennsylvania, headquartered in Allentown, which will be headed by National Penn’s chief banking officer, David B. Kennedy.
Further, BB&T expects the deal to be accretive to its earnings in the first full year (excluding one-time charges). While the company will be incurring $100 million as pre-tax merger and integration costs, it expects to achieve cost savings of $65 million (roughly 30% of National Penn Bancshares’ operating expenses) annual.
Of late, BB&T has been on an acquisition spree. In August, the company completed the acquisition of Susquehanna Bancshares, Inc., while in June it purchased The Bank of Kentucky Financial Corporation. Further in 2014, the company had acquired more than 60 branches from Citigroup Inc. C.
We believe BB&T will not stop here. The company’s strong liquidity position and stabilizing economic environment are expected to lead more M&As in the near term.
Currently, BB&T carries a Zacks Rank #4 (Sell). One better-ranked major bank is The PNC Financial Services Group, Inc. PNC sporting a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment