Triangle: Pittsburghers head south
Yadkin Financial’s desire to sell itself was one of the worst-kept secrets in banking, but guessing the eventual buyer would have been a fool’s errand. Why would Pittsburgh-based FNB spend $1.4 billion on Yadkin, a price expected to stunt its net worth for more than four years? Why would Yadkin cast its lot with a bank with no brand awareness or connection to North Carolina? Investors of FNB appeared perplexed, too: Shares declined 9% when the takeover was announced in mid-July. Six of eight analysts rate the company as a hold.
But peel back the onion a bit, and the story gets more interesting. Raleigh investor Adam Abram and Yadkin CEO Scott Custer started cobbling together a startup bank in 2010. Over the next seven years, they bought seven N.C.banks, most of them struggling with credit issues, and presto, Yadkin had assets of $7.5 billion. Benefiting from a rebounding economy and fewer bad loans, a share of Yadkin has increased 3.6 times since 2010, more than double the pace of its Southeast bank peers.
Bank regulations adopted since the 2009 financial crisis add significant costs once a company hits $10 billion in assets, so Yadkin faced a crossroads. The FNB purchase solves that issue. The Pennsylvania bank, which has doubled in size since 2011 by making nine acquisitions, has about $21 billion in assets, 330 offices and an aggressive, 51-year-old CEO, Vincent Delie Jr. By jumping over Virginia, where it does not operate, FNB violates an unwritten industry rule that the smartest acquisitions involve adjoining territories. FNB told investors that Virginia banks are overvalued and it will have a chance to fill in the gap once it has built its North Carolina franchise.
Demographics play a key role in the deal. Yadkin’s 100 offices are in parts of North Carolina in which population has increased an average of 7% since 2010. FNB’s markets, mainly Pittsburgh, Cleveland and Baltimore, have shown no growth in that period. By accepting FNB shares in the transaction, Yadkin investors will own 35% of the company. Those with the most at stake are two of North Carolina’s shrewdest bank investors: Abram, with a $14 million holding, and Raleigh banker Mike Patterson, with $7 million. Patterson sold Raleigh-based CapStone Bank to NewBridge Bancorp for $64 million in 2014; Yadkin then acquired NewBridge earlier this year for $456 million.
The upside for Yadkin investors seems clear: If FNB thrives in North Carolina, its shares could break out after three years of trading between $11.50 and $14.50. If FNB flops, maybe other growth-starved Northeast banks, or better-known Southern rivals, are interested in a $7 billion company making loans in Charlotte, Greensboro and Raleigh.
Michael Lord, 64, took over as president and chief executive officer of the State Employees’ Credit Union on Sept. 1. An SECU employee for 41 years, Lord, a graduate of N.C. State University, has been chief financial officer since 1986. He replaces Jim Blaine, CEO since 1979, who is retiring. Raleigh-based SECU operates 257 branches in all 100 counties and has more than 2 million members and 5,800 employees.
RALEIGH — Xylem, a water technology firm based in New York, will acquire Sensus for $1.7 billion in cash. Sensus makes smart meters for electric, gas and water industries. The company based here had revenue of $837 million in the latest fiscal year and employs about 3,300 people worldwide. The transaction is expected to close in the fourth quarter.
RALEIGH — N.C. State University will receive $45 million over the next five years from Rocky Mount-based Golden LEAF Foundation to help finance construction of a $160 million plant sciences research center on Centennial Campus. The project also will receive $85 million in state bond money.
RALEIGH — Alistair Macdonald became chief executive officer of INC Research Holdings. He replaces Jamie Macdonald, CEO since 2013, who will remain vice chairman. Alistair Macdonald has been president and chief operating officer since January 2013. The contract research organization went public in 2014 and had revenue of $1.4 billion in 2015.
CHAPEL HILL — New York-based Pfizer acquired Bamboo Therapeutics, a gene-therapy developer based here, for $150 million. Shareholders could receive an additional $495 million if certain milestones are met. Bamboo makes treatments for neurological and neuromuscular diseases. The company’s executive chairman is Jude Samulski, director of UNC’s gene therapy center and co-founder of Chatham Therapeutics, which was acquired by Baxter International for $70 million in 2014. UNC owns an undisclosed equity stake in Bamboo, a spokesman said.
MORRISVILLE — Humacyte received $9.9 million from the California Institute for Regenerative Medicine, an agency that promotes stem-cell therapies. The investment will help fund clinical trials for Humacyl, the company’s flagship product for patients with chronic kidney disease. Started in 2004 by former Duke University professor Laura Niklason, Humacyte raised $150 million in October.