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Regional banks BB&T, SunTrust join to create $66B operator

FILE - This Aug. 22, 2003 file photo shows the corporate headquarters of BB&T in Winston-Salem, N.C. (David Rolfe/The Winston-Salem Journal via AP)

ATLANTA (AP) — Southern regional banks BB&T and SunTrust are combining in an all-stock deal to create a new bank valued at about $66 billion.

The banks said Thursday that the combined company will be the sixth-largest U.S. bank based on assets and deposits. It will have approximately $442 billion in assets, $301 billion in loans and $324 billion in deposits serving more than 10 million households.

Regional banks can be a bellwether for local economies and the willingness to pursue a deal of this size can be taken as a signal of optimism. The U.S. economy was sizzling in last year. The Commerce Department estimated last month that the economy, as measured by the gross domestic product, grew at a brisk 3.4 percent annual percent rate in the July-September quarter

"It's an extraordinarily attractive financial proposition that provides the scale needed to compete and win in the rapidly evolving world of financial services," BB&T Chairman and CEO Kelly King said in a prepared statement.

The combined company will be based in Charlotte, North Carolina, its board and management evenly split between BB&T Corp. and SunTrust Banks Inc. A new name will be chosen before the deal closes in the fourth quarter.

The combined company will keep a community banking center in Winston-Salem, North Carolina, where BB&T is based. It will keep a wholesale banking center in Atlanta, where SunTrust has its headquarters.

SunTrust shareholders will receive 1.295 shares of BB&T for each share they own. BB&T shareholders will own about 57 percent and SunTrust shareholders will own the rest. SunTrust shareholders will receive a 5 percent increase in their dividend once the deal is complete.

Shares of SunTrust jumped 9.8 percent before the market open, while BB&T's stock rose 5.5 percent.

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