Garnet Capital Advisors Blog

EXCERPT: The SunTrust and BB&T merger will require the banks to sell many branches and deposits, presenting smaller banks with an opportunity to enter these markets. But picking up branches and deposits will require bankers to add loans, and Garnet Capital can help.

SunTrust's recent merger with BB&T will be the biggest transaction of its kind since the 2008 financial crisis.

The $66 million merger between SunTrust and BB&T that was announced earlier this year marked the biggest bank merger since the economic debacle over a decade earlier. But that's not the only reason why this is big news. This merger may also be setting the trend of a wave of mergers in the banking industry while providing smaller banks with plenty of opportunities to enter these markets.

Not only will the banks themselves be impacted by such a transaction - as well as the customers they serve - but smaller banks may find themselves with a unique proposition on their hands.

Both SunTrust and BB&T may sell branches in various markets across the Southeast in the near future. More specifically, the banks plan to sell off the deposits associated with the sold-off branches in order to comply with regulators. After all, regulators still need to provide final approval for the merger which the banks might wait until the end of the year to obtain.  

Clustered Branches May Create an Unsustainable Environment

The banks say that the transaction - which would create a combined bank named Truist Bank - could result in 740 of both banks' 3,100 branches being located within a two-miles of each other. This situation would virtually saturate the area, which has lawmakers concerned.  

The merger between SunTrust and BB&T will result in a number of branch and deposit sell-offs, which could present a unique opportunity for smaller banks to enter the market.

This could turn out to be unsustainable in an environment where banks are closing branches down as an increasing number of customers are opting to do their banking with online and mobile service providers. At the same time, while many branches may remain as they are, many others could be expanded to provide customers with a wider range of products and services. This could help to retain current customers by better serving their needs while also attracting new ones.

The merger will also provide BB&T with a much bigger stake in the mortgage industry. And when combined, the newly formed bank would have combined total assets of a whopping $442 billion, making it the sixth-biggest bank in the country.

Customers Will Be Affected By the Merger

Customers will certainly be affected to some degree, both in positive and negative ways. While temporary complications could arise from things such as changes to routing numbers, account numbers, and direct deposits, customers may also benefit from added services as the merger will allow for more money to be invested in technological advancements.

Small Banks Stand to Benefit From Branch and Deposit Sell-Offs

But the selling off of branches and deposits could also provide nearby banks and credit unions with the chance to get a piece of the pie in the form of new customers or deposits. In fact, if the opportunities that present themselves are taken full advantage of, these smaller banks could even become stronger after this massive merger takes place.

Of course, picking up new branches and deposits will require bankers to add loans to their portfolios, which can be tricky to try and navigate without expert help. Luckily, Garnet Capital is well versed in this particular realm and can help these banks thanks to our vast network of both qualified buyers and sellers.

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