Two community banks based in eastern North Carolina — Kinston’s the little bank and Union Bank & Trust of Oxford – have agreed to a merger that will create a bank with 15 offices, including several in the Triangle.
Under the definitive agreement announced Tuesday, little bank shareholders will own about 60 percent of the combined institution and Union shareholders will own the remaining 40 percent. The combined bank will have about $665 million in assets and $480 million in loans.
The combined bank will be headquartered in a neutral location, Greenville, and will operate under the Union Bank brand. Little bank chief executive Rob Jones will be president and CEO of the combined bank and John Burns, president and CEO of Union, will be executive vice president and chief banking officer.
The chairman of little bank, Robert “Lee” Burrows, Jr., will be chairman of the combined bank’s board of directors. Crawford Knott, chairman of Union, will be vice chairman of the combined bank. The board will consist of 11 board members from little bank and seven from Union, which the banks said would reflect the ownership stakes of the shareholders of the two banks.
Union Bank has full-service branches in Cary and Youngsville and a loan production office in North Raleigh, where it expect to open a full-service branch by year’s end.
Neither little bank nor Union officials could immediately be reached for comment.
“By almost doubling our size, we expect to be able to take advantage of efficiencies and offer new products and services for the benefit of our customers, employees and shareholders,” Jones said in a statement.
Burns said in a statement that Union wasn’t “actively considering a partnership until we met Rob and his team at the little bank” and realized that the banks have much in common and could capitalize “on the benefits that come with being a larger bank.”
Community banks have been consolidating as they grapple with increased regulatory costs and a low-interest-rate environment that limits what they can charge for loans. Since the recession began more than a half-dozen community banks with either a Triangle headquarters or a local presence have been swallowed by larger competitors.
The deal announced Tuesday calls for Union shareholders to receive 0.8843 shares of little bank stock for each share they own. That values the deal at $30.7 million, based on Monday’s closing price of little bank shares, which are traded over counter.
Founded in 1998, little bank posted net income of $2.5 million for the first nine months of this year, up 6.3 percent from a year ago. Union, which was founded in 2006, generated $679,000 in net income in the first six months of this year, down from $738,000 a year ago.