It’s official. Truist is here.

Truist Financial Corp. debuts today as the nation’s newest and sixth-largest bank with a branch presence in 17 Southeast and mid-Atlantic states and $463.7 billion in total assets.

The legal and regulatory combining of BB&T Corp. and SunTrust Banks Inc. was completed at midnight Friday, sending those storied brands to the history shelves.

BB&T shareholders own 57% of Truist following the $30.4 billion purchase of SunTrust.

Now, all eyes — at least for the next week or so — are on how smoothly Truist takes over serving more than 10 million households anchored by Florida, Georgia, North Carolina and Virginia.

After 10 months of anticipation, Truist’s back office and software units plunged officially today into the challenge of managing the transition for individual and business customers.

Analysts estimated that bank deals are vulnerable to between 5% and 15% customer run-off from those not wanting to be part of a larger bank or not a fan of the acquiring bank.

Bankrate.com said routing and account numbers can change in bank acquisitions, which can complicate direct deposits and automatic bill payments. Credit-card holders may need to visit a different website to pay their monthly bills. Back-office systems, such as customer support, will likely change.

In this instance, with legacy BB&T being the surviving bank entity, Truist officials expressed confidence in few, if any, glitches.

Online, mobile outage

If there is concern of an integration hiccup, it comes from BB&T experiencing an IT outage that kept millions of customers from using online and mobile banking services for more than 15 hours in February 2018.

BB&T has sued a computer hardware vendor, claiming it was responsible for what the bank calls a “catastrophic” outage.

The lawsuit was filed Nov. 26 against Hitachi Vantara Corp. in the federal court in Winston-Salem. Hitachi is being sued for breach of contract, unfair and deceptive trade practices, and gross professional negligence in how it sold, installed and maintained the hardware.

Although BB&T is requesting at least $75,000 in damages in the complaint, it is likely a potential award could be much larger given the bank is asking for compensatory damages with interest, and punitive damages, both of which could be increased by a jury.

Daryl Bible, the company’s chief financial officer, told analysts in April 2018 that “the cost was about $15 million in lower deposit service charges and about $5 million in higher operating expenses.” BB&T extended branch hours on Feb. 23-24 and Feb. 26, and added employees in its customer care centers, branches and social media response teams.

The outage at its $300 million Zebulon data center began about 4 p.m. Feb. 22, 2018, with the main impact lasting between 24 and 30 hours, although some services were not restored until Feb. 26, 2018.

An outage map showed the biggest problems were in the Triad, Charlotte and the Triangle, as well as in Atlanta, Washington, Maryland and Philadelphia.

The interruption of services drew anger in social media, as BB&T customers were unable to get money out of an ATM, check whether direct-deposits had shown up or if bills had been paid.

BB&T posted a 97-second video on its website in which King apologized for the outage and explained what happened and what steps the bank planned to take.

Embracing technology

In the past two years, BB&T embraced a digital-first approach to plugging in artificial intelligence and robotics into its back-office, customer-service and compliance operations.

Initially called “Disrupt or die,” the bank recently softened the phrase to “Disrupt and thrive” as it launched the latest phases.

Since the end of 2016, BB&T’s “disrupt or die/disrupt to thrive” initiative has led to reductions in employees (down 2,487, or 6.7%, to 34,723) and branches (down 407, or 18.5%, to 1,789).

The banks said they have 740 branches within two miles of each other within their markets, of which 30 SunTrust branches — including nine in the Winston-Salem metropolitan statistical area — are being divested to First Horizon National Corp. in 2020 as part of an anti-trust agreement with the U.S. Justice Department.

24 months for conversion

The banks have said it could take up to 24 months after closing to integrate the operating systems, including branch networks. It is projected to be the largest bank integration since Wells Fargo & Co. acquired Wachovia Corp. in December 2008, which involved $1.4 trillion in total assets.

Analysts say it is likely the banks will save the Carolinas, Georgia and Virginia for last, which could be the fall of 2021.

According to the Federal Deposit Insurance Corp. filing approving the deal, Truist is projected to have 2,593 branches when the megadeal closes.

The banks agreed not to close any branches in the first year after closing their deal, and to not close any branches for at least three years in markets where there are fewer than 2,500 residents.

“The Carolinas and Georgia will convert last, in part because they’re the largest, most complex and most intertwined of the two banks’ territories,” said Tony Plath, a retired finance professor at UNC Charlotte.

“But it’s also because that’s where sensitivity, and potential backlash, toward the merger runs highest.

“So, you give everyone in the home markets a little time to settle down, take a breath, drain the emotion out of the merger, and then you consolidate operations,” Plath said.

Plath said the public “is much less forgiving of IT problems that disrupt normal banking activity than they used to be, and they turn almost immediately to social media to complain.”

“So any sort of IT glitch that’s traceable to a merger-conversion problem is going to be immediately attacked by customers, right at the point where the newly combined banks are most vulnerable to customer run-off.”

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rcraver@wsjournal.com

336-727-7376

@rcraverWSJ

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