8-KAcquisitions & DispositionsMaterial AgreementsRegulation FD+1

TRUIST FINANCIAL CORP 8-K Report, Material Agreement (Aug 17, 2009)

Filed August 17, 2009For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

TRUIST FINANCIAL CORP (TFC), under its former name BB&T Corporation, filed an 8-K on August 17, 2009, to disclose a significant acquisition. Effective August 14, 2009, Branch Bank, a subsidiary of BB&T, assumed all deposits and acquired certain assets and liabilities of Colonial Bank from the Federal Deposit Insurance Corporation (FDIC) as receiver. This transaction involved the assumption of approximately $21.8 billion in assets, including loans, marketable securities, and cash, and approximately $23.7 billion in liabilities, predominantly customer deposits. The acquisition was structured with certain loans acquired at a discount and a substantial payment from the FDIC to Branch Bank, along with significant loss-sharing agreements to mitigate risk on covered assets.

Key Highlights

  • 1BB&T Corporation (TFC) subsidiary, Branch Bank, acquired substantially all assets and liabilities of Colonial Bank from the FDIC as receiver.
  • 2The acquisition includes approximately $21.8 billion in assets and the assumption of $23.7 billion in liabilities, primarily customer deposits.
  • 3The FDIC provided a payment of approximately $3.5 billion to Branch Bank as part of the transaction, subject to post-closing adjustments.
  • 4Extensive loss-sharing agreements are in place with the FDIC covering significant portions of loans and securities, with the FDIC reimbursing 80% to 95% of covered losses.
  • 5Residential mortgage loans and other real estate covered by loss sharing have a 10-year term; commercial loans and securities have a 5-year loss sharing term for the FDIC.
  • 6BB&T also announced a public offering of its common stock on August 17, 2009, as disclosed in a separate press release.
  • 7Financial statements and pro forma information related to the acquisition were to be filed in a subsequent amendment.

Frequently Asked Questions

The main event reported is the completion of the acquisition by BB&T's subsidiary, Branch Bank, of substantially all the assets and liabilities of Colonial Bank from the Federal Deposit Insurance Corporation (FDIC), which was acting as the receiver for Colonial Bank. This effectively transferred Colonial Bank's deposits and a significant portion of its assets and liabilities to BB&T.

The acquisition involved approximately $21.8 billion in assets and $23.7 billion in liabilities, including a large amount of customer deposits. BB&T acquired assets at a premium for deposits and a discount for certain loans. The FDIC provided a payment of approximately $3.5 billion to BB&T. Crucially, significant loss-sharing agreements with the FDIC mitigate BB&T's risk on billions of dollars in loans and securities, with the FDIC covering 80-95% of eligible losses.

The loss-sharing agreements are designed to protect BB&T from significant potential losses on the acquired loans and securities from Colonial Bank. The FDIC will reimburse Branch Bank for a substantial percentage (80% to 95%) of losses incurred on these 'covered assets' for specified periods, thereby reducing the financial risk to BB&T in acquiring a failed institution.

In addition to the acquisition details, the filing also references a press release issued by BB&T on August 17, 2009, announcing the commencement of a public offering of its common stock. This suggests BB&T was likely seeking to raise capital concurrently with this significant transaction.