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BB&T is the new ‘sheriff’ in Pennsylvania banking

It’s not like BB&T Corp. Chairman and CEO Kelly King stood at the Mason-Dixon line wearing an eye patch and walking on a peg leg with a parrot sitting on his shoulder while he ordered his crew to take over Pennsylvania.

But in less than a year, the Winston-Salem, N.C.-based bank with virtually no statewide name recognition last Halloween has stormed into Pennsylvania and, with two major acquisitions, vaulted into position as one of the biggest banks doing business in the state.

If its latest deal — the $1.8 billion acquisition of Allentown-based National Penn Bancshares Inc. announced Aug. 17 — closes, BB&T will have the fourth-largest share of deposits in the state at more than $15.7 billion. The deal is expected to close mid-2016, and by that time, BB&T will have spent $4.3 billion in Pennsylvania acquisitions in a year. It closed on its $2.5 billion deal for Susquehanna Bancshares Inc. on Aug. 1.

“If the phone of every bank president in that area wasn’t ringing when the Susquehanna deal was announced, you can damn well bet it was ringing really loudly (after BB&T announced the National Penn deal),” said Garland McPherson II, managing member of investment banking firm Garland McPherson & Associates LLC in Towson, Md. “To me this says there’s a new sheriff in town. You’ve had the PNCs of the world that have long dominated the state, but that’s all going to change.”

Once the National Penn deal goes through, BB&T will have a 6.4 percent deposit market share in the state and almost 300 branches — though it plans to close about 25 National Penn branches, according to King. That’s ahead of long-time Pennsylvania stalwarts such as M&T Bank and Santander.

A banking ‘leader’

It’s a somewhat surprising transition for a 143-year-old bank with about $210 billion in assets — $220 billion at the closing of the National Penn deal — that hadn’t previously crossed north of the Maryland border, but found value in Pennsylvania’s slow-growing but stable market.

“When you talk about banks, I hate to say it, but most of them are followers,” said Christopher Marinac, a managing principal and director of research at FIG Partners LLC in Atlanta. “BB&T is one of the true leaders. They’re one of the few that knows you have to be more efficient now, you can’t wait for the Fed to bail you out by raising the interest rates. BB&T is interested in markets that are stable, but deep. They saw the number of rooftops in Philadelphia and the surrounding area, and even though the region isn’t growing as fast as North Carolina or South Carolina or Texas, they know there is value in Pennsylvania.”

The bank’s rise to power in Pennsylvania’s financial industry started with its $2.5 billion buy of Susquehanna Bancshares Inc., formerly of Lititz. The deal closed Aug. 1, and the two sides are in the process of integrating Susquehanna’s computer system into BB&T’s. That process is expected to be complete in November, King said.

At the time of the Susquehanna announcement last November, McPherson predicted BB&T wasn’t done with acquisitions in Pennsylvania, and he doesn’t think they’re done now. He believes BB&T will come back to the state with “tuck-in” deals — smaller buys that fill in the bank’s footprint in Pennsylvania or extend it into western Pennsylvania.

“We’re talking banks with $1 billion, $2 billion, $3 billion in assets,” he said. “It’s usually not the kind of deals BB&T makes, but it makes sense for BB&T in Pennsylvania just to fill in that footprint.”

Michael Sadowski

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