A planned merger with First South Bancorp Inc. will propel Carolina Financial Corp. toward a major goal: having a presence in North Carolina’s large metro markets. The merger also will give its subsidiary, CresCom Bank, a larger share of the Wilmington market.

The bank, which already has two branch offices in Wilmington, will retain First South Bank’s existing location at 1612 Military Cutoff Road, said Jerry Rexroad, CEO of Carolina Financial Corp.

“First South Bank has a good team in Wilmington and a very nice office. We could not have picked a better location,” he said. “We are excited about adding Lee Bunch and his team, who will expand our overall service capabilities in Wilmington.”

Currently, CresCom ranks 12th in the Wilmington market, based on total in-market deposits. First South Bank ranks 16th.

Building on the capabilities at the bank’s existing branches at 4710 Oleander Drive and 115 N. Third St. in downtown Wilmington, and adding First South’s Military Cutoff location, CresCom expects its future growth in the area to be organic, Rexroad said.

After the merger is complete, CresCom’s first goal in the Wilmington market will be to stabilize its local team and get to a profitable growth level, he said.

“We’re still as positive [about Wilmington] as we were two years ago when we entered the market,” he said. “We think it will be one of the fastest-growing cities in the Southeast, and that that will be true for some time. A huge percentage of people I talk to say [of Wilmington], ‘That’s where I am going to retire.’

“Wilmington has good job growth and reasonable tax policy. With the port and the industries, it’s attracting and reasonable home prices, we’re going to see Wilmington as a highgrowth area of the U.S. for some time to come.”

CresCom entered the regional market in December 2014 when it completed its acquisition of several former First Community Bank branches in southeastern North
Carolina plus a loan production office in Wilmington.

Carolina Financial Corp., based in Charleston, South Carolina, and First South Bancorp announced the merger agreement June 12. Washington, North Carolina-based First South operates 28 locations in the state and has been in business for more than 100 years. The combined entity will have about $3.2 billion in assets and will be North Carolina’s second-largest community bank, after First Bank, Rexroad said.

The deal is valued at about $162 million, based on Carolina Financial’s stock price June 9, according to a news release.

“We are excited about the opportunity to enhance our scale in North Carolina and to enter Raleigh and Durham, two of the fastest-growing markets in the Southeast, as a result of this partnership,” he said.

While the economic drivers of the Triangle communities and those of Wilmington are different, all have lifestyle advantages over much of the country and are doing well, Rexroad said. He believes that is also true of Charleston, CFC’s home base, and the other South Carolina communities into which CresCom has expanded including Columbia and Greenville.

Even with its anticipated merger- driven growth, CresCom will remain a community bank, Rexroad said, adding that today’s community banks are those in the $1 billion to $10 billion asset range.

“Some things that define community banking are nimble, quick decision making and bankers who are out in the community, meeting with customers and learning their needs,” he said. “There does come a size when that becomes difficult though. On the other hand a community bank needs to be a certain size so that it can offer large enough loans for its biggest customers.”

Will CFC continue to look for merger opportunities for CresCom?

“We have a very defined strategic plan: being acquisitive and continuing to add community banks that have a like-minded culture,” Rexroad said. “Culturally, we are very closely aligned with First South Bank’s culture; we could not have found a better cultural fit.

“We believe there are some distinct advantages for banks that are probably twice our size. The North Carolina market, in particular, has lost those banks that are $5 billion to $7 billion and are focused on customers. We definitely see that as an opportunity for growth, and we’re always looking for good community bankers to join us in our commercial and consumer areas.”

The CresCom-First South Bank merger has been approved by directors of both banks. If it gains regulatory approval, the transaction is expected to close in the fourth quarter of 2017, with system conversion and signage changes taking place in the first quarter of 2018, according to officials.