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SunTrust, Crestar set deal
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July 20, 1998: 1:43 p.m. ET
Banks to merge in $9.5B stock deal, creating 10th-largest U.S. bank
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NEW YORK (CNNfn) - SunTrust Banks Inc. said Monday it has agreed to merge with Crestar Financial Corp. in an all-stock deal valued at $9.5 billion that creates the 10th-largest bank in the United States.
The boards of both companies have approved the deal, under which SunTrust will exchange 0.96 share of its stock for each Crestar share. Crestar will become a wholly owned unit of SunTrust.
SunTrust, based in Atlanta, is the 18th-largest U.S. bank. Crestar, based in Richmond, Va., is the 36th-largest. The companies said the combined unit will form the 10th-largest U.S. bank, with $88 billion in assets and 1,093 branches in Florida, Georgia, Tennessee, Alabama, Virginia, Maryland, and the District of Columbia.
News of the deal sent SunTrust (STI) shares down 9-7/8, more than 11 percent, to 77-9/16 in midday trading. Crestar (CF) shares climbed more than 12 percent, gaining 7-3/4 to 71-3/4.
SunTrust said it expects the deal to add to its 1999 earnings and that the combined company will be able to cut expenses by $130 million a year. The company said it expects to achieve 75 percent of those cuts by the end of 1999, with the rest coming in 2000.
The companies said they don't anticipate any branch closings because they don't have overlapping territories, and that job losses will be "minimal."
SunTrust also said it expects to take a $200 million charge for the transaction, as well as a $50 million charge to align the companies' accounting and reserving policies.
Richard Tilghman, Crestar chairman and chief executive officer, will become vice chairman of SunTrust's board of directors.
The SunTrust-Crestar merger maintains a trend of bank mergers around the country. Earlier this month, Star Banc Corp. and Firstar Corp. announced a merger that would create the 21st-largest bank holding company in the United States.
In April, NationsBank Corp. and BankAmerica Corp. announced they would combine, forming the first coast-to-coast bank and the country's second-largest bank, after Citicorp.
"Banking has been the driving force in mergers and acquisitions this year," Richard Peterson, an analyst at Securities Data Corp., told CNNfn. "With over $1 trillion in all U.S. deals, about $250 billion have been in the banking sector." 
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SunTrust
Crestar
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