Crescent State Bank, East Carolina Bank, Vantage South Bank and NewBridge Bank: All these community banks became part of what is now Yadkin Bank through a series of mergers in the past four years.

Soon, Raleigh-based Yadkin Bank will cease to exist as an entity, when its parent, Yadkin Financial Corp. merges with Pittsburgh-based FNB Corp. If federal regulators and both companies’ shareholders approve, that $1.4 billion transaction is expected to close in the first quarter of 2017 and be followed by Yadkin Bank’s merger into FNB subsidiary First National Bank of Pennsylvania, according to a news release in July.

“If you’re going to acquire a bank, Yadkin is a good bank to acquire,” said Bill Sackley, a professor of finance at University of North Carolina Wilmington. “I have a lot of respect for Yadkin Bank; I think it’s well run, and I think highly of [CEO] Scott Custer.”

Sackley noted that Yadkin was named N.C. Community Bank of the Year in 2014 because of its success in the State Small Business Credit Initiative, which is overseen by the U.S. Department of the Treasury. The award was presented by the N.C. Rural Economic Development Center on behalf of the state.

Officials of FNB Corp. said in the news release that their company will acquire Yadkin Financial Corp. in an all-stock transaction valued at about $27.35 per share, or $1.4 billion in the aggregate. Those numbers are tied to the closing stock price of FNB as of July 20. 

Under the terms of the merger agreement, which has been approved by the board of directors of each company, shareholders of Yadkin will be entitled to receive 2.16 shares of FNB common stock for each common share of Yadkin.

The acquisition of Raleigh-based Yadkin Bank will provide FNB with Yadkin’s roughly $7.5 billion in total assets, $5.3 billion in total deposits, $5.4 billion in total loans and 100 banking offices located in North and South Carolina, according to the release. Two of those locations are in Wilmington.

Currently, FNB has locations in Pennsylvania, Ohio and Maryland. In its release, the company stated it would have a post-merger presence in “several high-growth markets” in the Carolinas.

“This merger makes a lot of sense for FNB,” Sackley said. “It expands its geographic footprint into markets that are attractive in North and South Carolina. There’s maybe even more potential in the metro markets of North Carolina than there is in South Carolina.”

With the acquisition of Yadkin, FNB will have nearly $30 billion in total assets and more than 400 full-service banking offices. The combined company will also have about $21 billion in deposits and $20 billion in total loans. 

Yadkin shareholders will own about 35 percent of FNB post-transaction, the release stated.

Edward Graham, also a professor of finance at UNCW, sees the Yadkin-FNB merger as “an artifact of Dodd-Frank.” 

He said he believes the Dodd–Frank Wall Street Reform and Consumer Protection Act, which was enacted in 2010, has made it hard for smaller banks to be successful and has discouraged small bank startups. 

The costs of meeting more stringent federal regulations and the higher capital requirements for banks – both resulting from Dodd-Frank – have made small banks look at opportunities to acquire or be acquired by other banks, Graham said.

In addition, the continued low interest rate environment is squeezing banks’ revenues, he said.

FNB’s expanded size will help it be more competitive, CEO Vincent Delie Jr. said in the release.

“With this additional scale, FNB will be better positioned to compete effectively in an environment which requires constant attention to improving operational efficiencies. Our prospects for improved efficiency and revenue growth will serve FNB well as we continue to drive shareholder value creation,” he said.

Sackley agreed that banks these days often view larger as better, given higher costs and lower lending revenues.

“We’ve been in consolidation mode for many, many years,” he said. “There are so many pressures, whether they be financial or regulatory. It’s not a great environment for banks. Do I expect that to change any time soon? No.”

They key to post-merger success for FNB, he said, will be the enlarged bank’s ability to achieve the efficiencies it envisions.

“Can they cut as many costs as they say they are going to? They will have to cut costs, and there is no vibrant lending market,” Sackley said. “But maybe they can lend in a higher-level market.”