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There was a time when North Carolina had the upper hand in banking-industry consolidation and the development of startup banks. Those days are gone. South Carolina’s South State Bank is buying Charlotte-based Park Sterling for $690 million, while Virginia-based TowneBank is acquiring Raleigh-based Paragon Bank for $324 million.

The deals follow the pending acquisition of BNC Bancorp of High Point by Nashville’s Pinnacle Financial Partners and F.N.B. Corp.’s recent purchase of Raleigh-based Yadkin Bank.

First BankBusiness NC

It leaves Asheville-based HomeTrust Bancshares, Charlotte-based Capital Bank and Southern Pines-based First Bancorp as the only Tar Heel-based institutions with assets in the $3 billion to $30 billion range. (Editor’s note: after this was published, First Horizon National Corp. of Tennessee agreed to buy Capital Bank.) They are much smaller than giants Bank of America, BB&T and First Citizens, which have multistate operations with a continually lessening reliance on North Carolina.

North Carolina has been among the five states most affected by banking-industry consolidation, says Peter Gwaltney, president of the N.C. Bankers Association, citing an American Banker story. That makes lots of sense: Our state’s growth is attractive to acquisitive banks willing to write big checks to expand.

No one in financial circles will be surprised if First Bancorp, HomeTrust and two other independent banks with more than $1 billion in assets — Live Oak Bancshares of Wilmington, and Peoples Bancorp of Newton — are acquired in the current consolidation wave. (Two others, Southern BancShares of Mount Olive and Fidelity BancShares of Fuquay-Varina, are controlled by the Holding family, which also runs First Citizens.)

Before the 2007-09 recession, all this deal-making would have been followed within a few months by news of startups in various N.C. communities. A displaced former bank CEO, fresh with winnings from the sale, would recruit some wealthy local folks to start a new institution, pledging to offer Disney-quality customer service. That’s what former Centura exec Bob Hatley did at Paragon and Charlotte banking veteran Bryan Kennedy did at Park Sterling.

But it hasn’t happened in the last decade because of low interest rates, which squeezes bank profit margins, and increased regulation, Gwaltney says. But he notes some undisclosed efforts are underway to create new banks in the state. “Count me as an optimist,” he says.

We’ve been hearing that for a couple of years, now, and nothing has happened. But hope springs eternal. Local banks are like local newspapers and coffee shops: indispensable community-oriented institutions. “We’d certainly like to see more local CEOs surrounded by local boards,” Gwaltney says.

So would we.

 

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