In one of the biggest bank acquisitions since the recession, BB&T Corp. of North Carolina has purchased Lititz-based Susquehanna Bancshares Inc. for $2.5 billion.
Susquehanna Bancshares is the parent bank for Susquehanna Bank. BB&T has $187 billion in assets, making it the 11th-largest bank in the country. The deal is 70 percent stock and 30 percent cash, meaning about $750 million in cash will change hands.
Susquehanna and its 245 bank branches in its footprint of Central Pennsylvania, Philadelphia, southern New Jersey and Maryland will be merged into BB&T. The deal is expected to close sometime in the third quarter of 2015, BB&T Corp. Chairman and CEO Kelly S. King said during a Wednesday morning conference call with analysts.
King said all customer-facing associates will keep their jobs, but there will be $160 million in cost-savings associated with the deal. He said he’s coming to Pennsylvania tonight to speak with about 500 Susquehanna associates about the merger and what it means for them.
“I’m going to guarantee to all of the client-facing associates that they have a job,” he said. “I think with our additional product offerings, they’re going to be excited.”
King admitted it will be more difficult with Susquehanna’s other associates. But he said BB&T has about 35,000 associates, and about 3,500 of them will be leaving within the next year. Susquehanna has about 3,500 associates, so there could be fits within the company for those who would be laid off.
This is the third deal in about two months the Winston-Salem company has pulled off. In On Sept. 8, it announced it would acquire the Bank of Kentucky for about $363 million. On Sept. 3, it announced it would acquire 41 Texas branches of Citibank. That came on the heels of acquiring 21 Texas Citibank branches in June.
The latest acquisition, King said, likely will be the last until all three deals are closed.
“Don’t expect us to come out with an announcement anytime soon,” he said.
The acquisition moves BB&T further north into the Mid-Atlantic, and is its introduction into the Central Pennsylvania, Philadelphia and southern New Jersey markets. King said those markets are very similar to ones the bank already is in, as it does business in small communities and large metro areas like Atlanta and Miami.
“Growing up in North Carolina, when we went into Miami, what I found is that people are people, human beings are human beings,” King said. “But we’re doing extremely well and it fits into our culture. At the end of the day, people value relationship management highly and there is a focus on getting their needs met.”
King said it isn’t about new products BB&T will be bringing to Susquehanna customers, but more enhanced products.
“(Susquehanna) has a well-developed product,” he said. “It has a really good wealth platform, but we have one that’s more substantial. We offer much more enhanced corporate banking strategies, we’ll be able to offer larger credit lines and more enhanced treasury services. So it’s more enhancements than new types of services.”
There is very little branch overlap with the merger, according to Ricky Brown, president of BB&T, which means a minimal amount of job loss for Susquehanna’s employees. William Reuter, chairman and CEO of Susquehanna Bancshares, said there will be back-room consolidations, but a definitive number had not been determined yet.
When the deal closes, all Susquehanna Banks will become BB&T banks, likely done over a long weekend, Brown said.
The move into Susquehanna’s footprint is the furthest north BB&T has ever moved. But with a number of Central Pennsylvania residents, especially in York County, that make the daily commute into the Baltimore area, Reuter said, BB&T isn’t exactly foreign to all its customers in the midstate.
“Our mergers have to make strategic sense,” Brown said. “The price was a fair price for us, as well as for Susquehanna and its shareholders. This was an opportunity that availed itself. No bank is ever bought, it’s sold. Susquehanna had the right cultural fit for us.”
Reuter affirmed Susquehanna shareholders will “make out very well” in the deal. The purchase price of $13.50 per share is about 36 percent higher than the stock was trading before the market opened Wednesday.
This is the second deal in two weeks where a larger, out-of-town bank acquired a Central Pennsylvania bank. On Oct. 30, S&T Bancorp Inc. of Indiana, Pa., announced it would buy Integrity Bancshares Inc. of Camp Hill for $155 million in cash and stock.
BB&T bought Susquehanna for about $13.50 per share when it opened trading Wednesday morning at $9.90. S&T bought Integrity for $52.50 per share when it started its trading that day at $27.