First Horizon National Corporation FHN recently sealed a deal with SunTrust Banks, Inc. STI and BB&T Corporation BBT. Under the deal, the Memphis, TN-based bank will acquire 30 branches from SunTrust Banks.
This February, BB&T and SunTrust had announced their 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 ongoing quarter, is valued at $66 billion.
“First Horizon is excited to welcome new employees and customers to our family,” said Bryan Jordan, First Horizon’s chairman and CEO. “We are proud of the tradition of trust we have earned for more than 155 years and look forward to working with BB&T and SunTrust to design a seamless onboarding experience,” Jordan added.
Terms of the Deal
Per the terms of the deal, First Horizon will assume deposits worth around $2.4 billion, at a deposit premium of around 3.4%. Moreover, the deal comes with about $410 million in loans.
The deal will enable First Horizon to increase the number of branches, and cater to the new markets in Durham, Chapel Hill and Winston-Salem, North Carolina, along with expanding its footprints into additional solid markets in Virginia and Georgia.
For a major regional bank like SunTrust, the deal was to satisfy regulatory requirements for merger of equals between SunTrust and BB&T.
Per the agreement, all existing SunTrust employees will be retained by First Horizon in the acquired branches on the deal’s closure. Moreover, during the transition period, the clients will be in talks with the bank for smooth completion of transition.
First Horizon recently entered into a stock-cash acquisition deal with Lafayette, LA-based IBERIABANK Corporation IBKC, per which the former will merge with the latter in an all-stock merger of equals. However, the takeover of branches from SunTrust is not related to this and the acquired branches will take the First Horizon Bank brand.
First Horizon’s repositioning and restructuring efforts, which are still underway, will help reallocate the capital into the core markets. Also, its focus on cost control and efforts to boost long-term profitability are expected to augur well. Further, a strong capital position will help it continue such acquisitions in the upcoming period.
Notably, shares of First Horizon have rallied nearly 9.3%, over the last three months, as compared with 11.2% growth recorded by the industry.
Currently, First Horizon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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BB&T Corporation (BBT) : Free Stock Analysis Report
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