(Reuters) - BB&T Corp agreed to buy Pennsylvania-based Susquehanna Bancshares Inc on Wednesday for $2.5 billion in cash and stock and said it was eyeing further expansion to new markets between Texas and Alabama.
The Susquehanna acquisition is one of the biggest U.S. banking deals since the 2008 financial crisis and follows BB&T's September purchase of Bank of Kentucky Financial Corp as well as 41 Citigroup Inc branches in Texas.
Merger activity in the banking sector has been muted since the financial crisis as regulators subjected acquirers to stricter scrutiny. For instance, M&T Bank Corp's planned $3.7 billion purchase of Hudson City Bancorp Inc has been on hold for over two years after the Federal Reserve raised concerns about M&T's anti-money laundering procedures.
But BB&T Chief Executive Kelly King said the tone on bank mergers has been changing, so long as they wouldn't result in reduced levels of capital or liquidity or place an undue burden on existing systems.
"I think the regulators have been signaling that they are receptive to combinations," King said. "They've just made it very clear to acquirers that you better have your house in order."
King added that he would like to fill gaps in the bank's southeastern U.S. footprint between Alabama and Texas and would look to expand more into Pennsylvania in the future, either through organic growth or acquisition.
Susquehanna, which is based in Lititz, Pennsylvania, has branches in that state, Maryland, New Jersey and West Virginia.
Shares of Susquehanna, which had a market value of about $1.8 billion as of Oct. 31, closed up nearly 33 percent at $13.12. BB&T shares finished down 1.7 percent at $37.67.
BB&T said the deal, which is expected to close in the third quarter of 2015, will add to its earnings in the first full year after its completion.
Susquehanna shareholders will receive 0.253 shares of BB&T and $4.05 in cash for each share held, valuing the deal at $13.74 per share based on BB&T's closing price on Tuesday.
Editing by Saumyadeb Chakrabarty, Maju Samuel and Meredith Mazzilli