In February 2019, BB&T announced its acquisition of SunTrust Bank for about $28 billion in stock. In December that year, the nation’s 6th biggest bank, Truist, was created. There are, of course, a multitude of reasons why financial institutions merge. A classic explanation is that they wish to obtain economies of scale by combining overlapping operations in particular markets. As regional commercial banks with a heavy consumer focus, both these institutions faced earnings pressure from developing headwinds in the mortgage market as interest rates climbed in 2018. (Table 1).
A key cost of consumer banking, including mortgage underwriting, is the maintenance of a retail branch network. Looking at annual data that all lenders must report to their regulators due to the Home Mortgage Disclosure Act, we can look at the statewide distribution of mortgage underwriting by these two institutions (chart 1).
While there are differences, there is a substantial overlap between the two banks’ “footprints” in the mortgage space. This is just one of a multitude of ways in which big data mortgage information can be used to assess activity, performance and strategy in the mortgage space.