BB&T isn’t worried about losing market share during its pending merger with SunTrust Banks to form Truist Financial, nor is it worried about the combined bank’s name, which has come under no shortage of scrutiny. That’s according to BB&T CEO Kelly King, who will be CEO of Truist once launched.
Truist, which will be headquartered in Charlotte, will have about $440 billion in combined assets. Although it would be the largest bank merger since the Great Recession, King pointed out the combined bank still will be only about 20% of the size of each of the largest U.S. banks.
King is confident about Truist’s projected $1.6 billion of net cost synergies and savings after investments that the bank will make back in the business on technology and innovation. “We think we’ll be best-in-class in terms of efficiency,” he said in BB&T’s second-quarter earnings call Thursday. “We don’t want to project it because we’re very conservative, but there will be clear revenue synergies out of this, so this is going to be a really high-performance company.”
While King acknowledged some local and regional banks are vying for BB&T’s and SunTrust’s existing customers, he said he’s confident the two companies can hold onto their client base by retaining customer-facing employees. The banks also have touted plans to use cost savings from synergies to invest heavily in innovation.
Nonetheless, Truist faces competition. Minneapolis-based U.S. Bank, for example, is expanding into targeted communities — including Charlotte — with a “digital-first, branch-light” strategy to reach existing customers who already carry products from U.S. Bank in their wallets but lack a full banking relationship.
Similarly, Memphis-based First Horizon National is aiming for $50 million in cost savings in 2019, with $20 million to be reinvested in a customer experience transformation effort, according to that bank’s second-quarter earnings slides. Among First Horizon’s strategic objectives is “dominate Tennessee,” where BB&T and SunTrust both have a significant footprint.
Also see: BB&T-SunTrust Faces Daunting Tech Integration After $66 Billion Merger
According to King, the systems integration planning for Truist is on track. “Historically, when we’ve done small acquisitions, it’s kind of like a ‘one weekend big bang’ where you can do everything,” he said. “This likely won’t be that.” He predicted it will be up to an 18-month process, during which the combined bank will upgrade all of its systems state by state over the course of months or business by business across all states over the course of months.
King also took the opportunity to defend the name choice of Truist for the combined bank. “We wanted a name that speaks to the essence of the companies but reflects a go-forward mentality in terms of growing with our clients, helping our communities become better places and, of course, doing a really good job for our shareholders and our associates,” he said.
A hearing between the banks and the U.S. House Committee on Financial Services on the proposed merger is scheduled for July 24.