Bank of North Carolina is expanding its presence in the Triangle by acquiring the corporate parent of financially struggling Harrington Bank, which has three branches in Chapel Hill.
BNC Bancorp, which is based in High Point and has 39 Bank of North Carolina branches in North Carolina and South Carolina, announced Wednesday that it has agreed to purchase Harrington’s corporate parent, Community First Financial Group, for stock valued at $24.2 million.
Today Bank of North Carolina has four branches in the Triangle. In addition, it plans to open a fifth branch, its second in Raleigh, in North Raleigh’s Stonehenge area in early 2014.
Adding Harrington’s branches “is a great addition to the footprint,” BNC CEO Rick Callicutt said in a phone interview. “We fully intend to keep all three locations in Chapel Hill.”
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The acquisitive-minded BNC also announced Wednesday that it is acquiring Albemarle-based Home Savings Bank, which has four branches. Since the spring of 2010, BNC has acquired nine banks.
“We want to try to do those things that allow us to leverage the infrastructure that we’ve already built and ... continue to advance the ball forward from an EPS (earnings per share) perspective,” Callicutt said.
Privately held Harrington posted a $1.7 million loss in 2012 and has lost $334,000 through the first three quarters of this year, according to data filed with the Federal Deposit Insurance Corp. The bank is controlled by Doug Breeden, a finance professor at Duke University and a former dean of the business school, and his family.
In May, Harrington sold its sole branch in Raleigh to TrustAtlantic Bank. Harrington opened its branch in North Raleigh in 2007 with plans to open other offices in the area, but pulled back when the recession hit.
Harrington “has been way overburdened” with problem loans, said Callicutt. “They’ve been in a situation where they can’t make any more loans or grow because of that.”
Harrington has about $179 million in loans and $198.8 million in deposits. When the deal closes, BNC will have about $520 million in loans and $385 million in deposits in the Triangle.
Harrington CEO Larry Loeser said the bank has been seeking a buyer or an investor for some time because it lacked the capital it needed to grow.
Loeser added that the BNC deal will be good for customers because of its larger branch network and the availability of additional products, such as mobile banking and brokerage services, that Harrington doesn’t offer.
The deal, which is technically a merger, is subject to approval by regulators. It is expected to close in the second quarter of 2014.
After the deal closes, Loeser will remain with BNC in an undefined role at least through the end of 2014 “and then we’ll decide where we go from there,” Callicutt said.
“We haven’t had really even a minute to get to know each other,” Loeser said.
Callicutt said BNC has plans for further expansion in the Triangle, either through another acquisition or by opening new offices.
“A third Raleigh location is absolutely something that will happen, and potentially a fourth,” he said.