Order Approving the Acquisition of a Bank Holding Company

Federal Reserve Bulletin,  Dec, 1998  by Robert Dev. Frierson

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SunTrust Banks, Inc. ("SunTrust"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. [sections] 1842(a)(3)) to acquire Crestar Financial Corporation ("Crestar"), and thereby acquire Crestar's subsidiary bank, Crestar Bank, both of Richmond, Virginia.(1) SunTrust also has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. [sections] 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 CFR 225.24) to acquire the nonbanking subsidiaries of Crestar and thereby engage in the nonbanking activities listed in the Appendix.(2)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 47,499 and 49,358 (1998)). The time for filing comments has expired, and the Board has considered the application and notice and all comments received in light of the factors set forth in sections 3 and 4 of the BHC Act.

SunTrust, with total consolidated assets of approximately $61.4 billion, operates banks in Florida, Georgia, Tennessee, and Alabama, and engages in a number of permissible nonbanking activities.(3) SunTrust is the second largest commercial banking organization in Georgia, controlling deposits of approximately $10.3 billion, representing 12.6 percent of total deposits in commercial banking organizations in the state ("state deposits"). Crestar, with total consolidated assets of approximately $26.2 billion, operates a bank with branches in Virginia, Maryland, and the District of Columbia. Crestar is the largest commercial banking organization in Virginia, controlling deposits of approximately $10.1 billion, representing 13.3 percent of Virginia state deposits. Crestar is the fourth largest commercial banking organization in Maryland, controlling deposits of approximately $4.9 billion, representing 8.9 percent of Maryland state deposits. In the District of Columbia, Crestar is the fifth largest commercial banking organization, controlling deposits of approximately $922.6 million, representing 9.1 percent of deposits in the District of Columbia.

Interstate Analysis

Section 3(d) of the BHC Act allows the Board to approve an application by a bank holding company to acquire control of a bank located in a state other than the home state of such bank holding company, if certain conditions are met. For purposes of the BHC Act, the home state of SunTrust is Georgia, and Crestar controls a bank that operates in Virginia, Maryland, and the District of Columbia.(4) All the conditions for an interstate acquisition enumerated in section 3(d) are met in this case.(5) In view of all the facts of record, the Board is permitted to approve the proposal under section 3(d) of the BHC Act.

Competitive Considerations

The BHC Act prohibits the Board from approving an application under section 3 of the BHC Act if the proposal would result in a monopoly or if the proposal would substantially lessen competition in any relevant banking market and, in the latter case, the Board has not found that the anticompetitive effects of the proposal are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served.(6) SunTrust and Crestar do not compete in any banking market. Based on all the facts of record, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market. Accordingly, the Board has determined that competitive factors are consistent with approval of the proposal.

Financial, Managerial, and Other Supervisory Factors

The Board has carefully considered the financial and managerial resources and future prospects of SunTrust and Crestar, and their respective subsidiaries, and other supervisory factors in light of all the facts of record. As part of this consideration, the Board has reviewed relevant reports of examination and other supervisory information prepared by the Reserve Banks and other federal agencies. The Board notes that the bank holding companies and their subsidiary banks are currently well capitalized and are expected to remain so after consummation of the proposal.

The Board also has considered other aspects of the financial condition and resources of the two organizations and the structure of the proposed transaction. Based Oh these and other facts of record, the Board concludes that considerations relating to the financial and managerial resources and future prospects of SunTrust, Crestar, and their respective subsidiaries are consistent with approval of the proposal, as are the other supervisory factors that the Board must consider under section 3 of the BHC Act.

Convenience and Needs Factor

The Board has carefully considered the effect of the proposed acquisition on the convenience and needs of the communities to be served in light of all the facts of record, including comments on the effect the proposal would have on the communities to be served by the combined organization. Overall, the Board received approximately 45 comments in favor of the proposal and nine opposed to, or expressing concern about, the proposal.