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SunTrust Acquisition of National Commerce
Allayannis, George (Yiorgos); Shapiro, Andrew
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SunTrust Acquisition of National Commerce
Allayannis, George (Yiorgos); Shapiro, Andrew Case F-1554 / Published September 20, 2008 / 10 pages. Collection: Darden School of Business
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Product Overview

This case presents an interesting acquisition opportunity that SunTrust considered in 2004: National Commerce Financial, a large commercial bank, based in Memphis, Tennessee, with a strong footprint in North and South Carolina. The case shows how capital ratios are often a key component in the bank-merger process, and it allows for the evaluation of whether Phil Humann (SunTrust’s CEO) could justify a multi-billion-dollar acquisition that had the potential to deplete capital, even if the deal were accretive to earnings.



Learning Objectives

• To discuss the qualitative factors that contribute to merger activity in the banking space • To understand the pros and cons of purchasing a large competitor • To calculate earnings accretion and dilution based on differing consideration scenarios (cash versus stock) • To calculate the pro forma Tangible Common Equity Ratio (TCE) based on differing consideration scenarios (cash versus stock) • To develop a deeper understanding of the role of capital structure for banks • To discuss the concept of an “optimal” capital structure for SunTrust and formulate methods for the company to bolster capital levels going forward


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  • Overview

    This case presents an interesting acquisition opportunity that SunTrust considered in 2004: National Commerce Financial, a large commercial bank, based in Memphis, Tennessee, with a strong footprint in North and South Carolina. The case shows how capital ratios are often a key component in the bank-merger process, and it allows for the evaluation of whether Phil Humann (SunTrust’s CEO) could justify a multi-billion-dollar acquisition that had the potential to deplete capital, even if the deal were accretive to earnings.

  • Learning Objectives

    Learning Objectives

    • To discuss the qualitative factors that contribute to merger activity in the banking space • To understand the pros and cons of purchasing a large competitor • To calculate earnings accretion and dilution based on differing consideration scenarios (cash versus stock) • To calculate the pro forma Tangible Common Equity Ratio (TCE) based on differing consideration scenarios (cash versus stock) • To develop a deeper understanding of the role of capital structure for banks • To discuss the concept of an “optimal” capital structure for SunTrust and formulate methods for the company to bolster capital levels going forward

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