DBRS Comments on BB&T Corporation’s Acquisition Announcement of National Penn Bancshares, Inc.

DBRS, Inc. (DBRS) has commented today that its ratings for BB&T Corporation (BB&T or the Company), including its Issuer & Senior Debt rating of A (high) with a Stable trend are unaffected following the Company’s announcement of a definitive agreement to acquire National Penn Bancshares, Inc. (National Penn). The transaction is expected to close in mid-2016, subject to customary closing conditions including regulatory approvals and National Penn shareholder approval.

DBRS views the transaction as consistent with BB&T’s strategy of strengthening its banking franchise through the acquisition of companies with similar cultures and risk profiles. Indeed, the National Penn transaction will bolster its Mid-Atlantic presence, augmenting the new markets gained with its recent Susquehanna Bancshares Inc. (Susquehanna; closed on August 1, 2014) acquisition. DBRS notes that the integration of National Penn will follow that of Susquehanna, which is scheduled for November 2015. Generally, DBRS negatively views successive acquisitions, as they have the potential to elevate integration risk. However, BB&T’s successful track record of integrating numerous bank acquisitions, as well as the relatively modest size of National Penn, moderates DBRS’s concerns.

With $9.6 billion in assets, National Penn represents a modest 5% of BB&T’s $210.0 billion in assets (as of August 17, 2015). The purchase price of approximately $1.8 billion, will consist of 70% stock and 30% cash. BB&T expects the acquisition to be accretive to earnings in the first full year, excluding restructuring costs. DBRS views BB&T’s estimated savings of approximately 30% of National Penn’s non-interest expense as achievable. Positively, the proposed acquisition does not materially impact BB&T’s sound capital metrics, as the Company will suspend share repurchases in 2H15 to comply with their approved capital plan that calls for up to $820 million in share repurchases and/or acquisitions.

BB&T Corporation, a bank holding company headquartered in Winston-Salem, North Carolina, reported $210.0 billion in assets at August 17, 2015.

Note:
All figures are in U.S. Dollars unless otherwise noted.