Raleigh-based Yadkin Financial Corp., the state’s largest community bank, will be acquired by Pittsburgh-based FNB Corp. for $1.4 billion, the companies announced Thursday.
Yadkin, founded in 2010, has grown to nearly 1,200 employees through a series of acquisitions. The all-stock transaction with FNB would pay Yadkin shareholders about $27.35 per share.
Investors reacted with skepticism, and analysts questioned the deal during a conference call. FNB’s shares closed at $11.99, down $1.21. Yadkin’s shares closed at $25, down 95 cents – and $2.35 below the acquisition price. In an acquisition, the company to be acquired typically rises to the value announced in the deal.
Scott Custer, Yadkin co-founder and CEO, will remain with FNB as a board member and a consultant for at least one year. The combined banking company expects a 25 percent savings from efficiencies, but those details have not been announced.
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“To my knowledge we’ll not be closing any branches,” Custer said. “As it relates to staff cuts, we’re four hours into this, so I couldn’t really begin to comment on that.”
As part of the acquisition, FNB will gain Yadkin’s $7.5 billion in assets and its 100 bank offices in North and South Carolina, creating an operation that extends from the Mid-Atlantic region to the Southeast. After the deal closes, FNB will have more than 400 bank offices and nearly $30 billion in assets. FNB will span from Pennsylvania to South Carolina, but will have no banks in Virginia.
FNB and Yadkin expect the merger to close in the first quarter of 2017, if it receives approval from shareholders of both banks and federal banking regulators. Yadkin shareholders would hold a 35 percent ownership in FNB.
Custer is a veteran banker who in 2004 became CEO of RBC Bank, a regional bank owned by Royal Bank of Canada. In that tenure, Custer oversaw RBC’s expansion from 270 to 430 branches. In 2012, Royal Bank sold RBC to Pittsburgh-based PNC Financial Services Group for $3.45 billion.
After leaving RBC, Custer, along with other investors, raised $153 million and created Piedmont Community Bank Holdings in 2010. The company became Yadkin after a merger last year between VantageSouth and Yadkin Bank of Statesville.
Both FNB and Yadkin are products of acquiring small banking systems. Yadkin is by far FNB’s largest acquisition and the company’s seventh in the past four years. Yadkin is the culmination of six acquisitions, most recently Greensboro-based new Bridge Bank for $456 million earlier this year.
Yadkin’s success made the company a topic of speculation last year that it was becoming an attractive acquisition target.
Custer said Thursday the company was exploring various strategic options when the FNB opportunity arose. He said one looming challenge for Yadkin was that it was approaching an asset size of $10 billion. Passing that threshold imposes stricter regulatory banking rules and associated expenses, he said.
Yadkin specializes in providing banking, mortgage, investment and insurance services in North Carolina and South Carolina. The bank provides small business lending services through its Government Guaranteed Lending division in Charlotte, and mortgage lending services through Yadkin Mortgage in Greensboro.
“We merge into a company that’s got sufficient size and scale to accomplish the things we need,” Custer said.