F.N.B. Corp. in Pittsburgh is making a big play to enter North Carolina.
The $21 billion-asset company said in a press release Thursday that it will buy Yadkin Financial in Raleigh, N.C., for $1.4 billion in stock. It is the third-largest buyout deal this year in the U.S. banking industry.
The deal values Yadkin at 223% of its tangible book value, which would be the largest documented premium this year in the industry, based on data from S&P Global Market Intelligence.
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North Carolina has lost more than 40% of its banks in the past decade, creating a new tier of larger institutions. More deals are expected to occur, raising questions about the pace of M&A and the fate of those bigger banks.
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A dozen banks from Arkansas to Virginia are nearing $10 billion in assets, where they will face higher compliance costs and caps on interchange fees. Mergers among those institutions could create a new class of regional bank.
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The Pennsylvania company said in a recent filing that its board also looked at succession planning, service provider relationships, board expansion and financial forecasts before seeking bids and agreeing to sell to F.N.B. Corp.
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Yadkin has roughly 100 branches across all major North Carolina markets, along with $7.5 billion in assets, $5.4 billion in loans and $5.3 billion in deposits. Rumors
"We are … excited to bring F.N.B.'s relationship-focused banking model and leading-edge technology to our new customers and prospective clients," Vincent Delie Jr., F.N.B.'s president and chief executive, said in the release. "The combination with Yadkin transforms F.N.B.'s growth profile and creates a premier regional bank with an expanded footprint across the mid-Atlantic and Southeast. … Our prospects for improved efficiency and revenue growth will serve F.N.B. well as we continue to drive shareholder value creation."
F.N.B. said it expects the deal to provide "mid- to high-single-digit earnings accretion," assuming flat interest rates over the next five years. It should take the company about four and a half years to earn back the expected dilution to its tangible book value.
The company plans to cut about a quarter of Yadkin's noninterest expenses, with most of the cuts to come next year. F.N.B. also expects to incur about $100 million in pretax merger-related expenses.
F.N.B. noted that it will gain builder finance and Small Business Administration capabilities after buying Yadkin. The deal is expected to close in early 2017.
The deal would combine two banks known as aggressive consolidators. Yadkin recently acquired NewBridge Bancorp in Greensboro, N.C., and F.N.B. has been
RBC Capital Markets and Reed Smith advised F.N.B. Sandler O'Neill and Skadden, Arps, Slate, Meagher & Flom advised Yadkin.
