Public gives comments on proposed merger between BB&T and SunTrust
Branch closures. Cuts in lending to minorities and low-income communities. Fewer loans to small businesses.
Those were among the concerns expressed about the proposed merger of BB&T and SunTrust during a public hearing Thursday on the $66 billion deal. The hearing by the Federal Reserve and Federal Deposit Insurance Corporation was part of the regulators’ review of the deal, which would result in the sixth-largest bank in the U.S. That bank would be headquartered in Charlotte.
It was the first meeting held for the public to address the proposed largest bank merger since the financial crisis of 2008.
More than 100 people attended the meeting at the Charlotte branch of the Federal Reserve Bank of Richmond in uptown. It drew a range of opponents and supporters, including SunTrust CEO Bill Rogers and BB&T CEO Kelly King.
But critics at the meeting said the combination of two already-large banks will result in less competition, potentially resulting in high banking costs for customers of the new bank. They also said the deal has the potential to harm communities, particularly from the closure of branches in rural areas when the industry has already shuttered branches in such places.
BB&T and SunTrust have said they could cut costs by trimming branches, noting that approximately 740 of their branches are within 2 miles of each other. In the Charlotte metro area, the banks have about 100 branches combined, according to federal data.
Branch closures in rural areas would hurt black farmers, Lesley Weaver, attorney for the National Black Farmers Association, a Virginia-based nonprofit, said at the meeting.
The merger would also concentrate more market share in the hands of the new bank, potentially raising costs for customers, she said. In certain metro areas, the merged bank will have more than 20 percent market share, she said.
“Increased market concentration leads to worse economic terms for bank customers,” Weaver said. The combination is also creating concerns that it is part of an industry trend that would make lending less accessible to black farmers, she said. She urged the Fed and FDIC not to approve the combination.
Jen Giovannitti, president of Pittsburgh-based Claude Worthington Benedum Foundation, also expressed fears about branches closing.
In West Virginia, SunTrust has already closed all of its branches, she said. Over the past four years, BB&T has closed more than 10 branches in the state, she said.
“This is a troubling trend,” Giovannitti said in an email to the Observer after the hearing. “Rural branch closures disproportionately impact rural communities and they have a profound effect on small business, older populations, and those who lack both broadband and transportation systems.”
Community support praised
The comments on Thursday were not all negative. Some praised the support that SunTrust and BB&T provide communities, including philanthropically.
Tammy Mann, CEO of The Campagna Center, a Virginia-based nonprofit, said the success of her organization owes much to investments made by SunTrust and other companies.
SunTrust’s foundation played a pivotal role in funding initiatives at the center, including a program that provides tutoring and mentoring to high school students, Mann said.
“SunTrust has been engaged and committed,” she said. “I hope that this combined entity under consideration will continue its commitment to our community and our work as we focus on our future.”
Floyd Miller, CEO of the Metropolitan Business League, a Virginia-based nonprofit, said SunTrust and BB&T have been supportive of the group’s initiatives. The league provides support to small, women- and minority-owned business in the Richmond area.
“I come to you today in support of this merger,” he said.
Reversing a trend
The combination of Winston-Salem’s BB&T and Atlanta’s SunTrust was announced in February and is expected to close in the fourth quarter of this year.
The banks expect to unveil the new company’s name in late second quarter of this year, King, BB&T’s CEO, said last week.
For Charlotte, the merger would create a new bank headquartered in the city — marking a reversal of its trend of losing bank headquarters.
Bank of America remains the only bank headquartered in Charlotte, though other banks of many sizes have a presence here.
Executives from SunTrust and BB&T said that, combined, they have more than 2,000 workers in the Charlotte region now. King has said he expects the new company to expand its employment in Charlotte over time.
Thursday’s hearing was the first held by the Federal Reserve for a bank merger since 2015.
If approved, the combination of BB&T and SunTrust would create a bank with approximately $442 billion in assets. That could put it just behind Minneapolis-based U.S. Bank., the fifth-largest U.S. commercial bank.
The size of the new bank has worried critics who say it would be another large financial institution that could hurt the economy if it fails. Rogers, the CEO of SunTrust, downplayed those concerns on Thursday.
“Let me assure you in the case of this merger, bigger does not mean riskier,” Rogers said. SunTrust and BB&T have conservative risk profiles, which they will maintain once combined as one company, he said.
“While both institutions are strong, we believe that together we can create tremendous value for everyone involved — our clients, associates, communities and shareholders,” BB&T’s King said in his prepared remarks. The combination would also provide both banks with greater scale to provide the digital services clients expect, he said.
Regulators must approve
Regulators must still approve the deal, which has prompted concerns from some members of Congress.
In a letter Tuesday, U.S. Sen. Sherrod Brown, D-Ohio, told the chair of the FDIC that the merger could signal the beginning of a surge in industry consolidation. It would also create the largest financial firm for which the FDIC has served as primary regulator, wrote Brown, the ranking Democrat on the Senate Banking Committee.
“A merger of this scale not only increases systemic risk and concentration, but it could also decrease competition,” Brown wrote.
But the CEOs of SunTrust and BB&T insisted Thursday that the deal will be good for customers and the communities in which the new bank will operate. King said the new bank will continue to serve “Main Street America, lending to local businesses, families and students.
“One of the most meaningful aspects of this proposed merger of equals,” he said, “is the potential impact on community reinvestment, which we believe will be even further enhanced through this merger.”