Bank Watch

Regulators approve deal to merge two Charlotte banks

Capital Bank CEO Gene Taylor, left, and Chief Financial Officer Chris Marshall.
Capital Bank CEO Gene Taylor, left, and Chief Financial Officer Chris Marshall. Charlotte Observer file photo

Capital Bank Financial Corp. and CommunityOne Bancorp announced Wednesday regulatory approval for a merger that will boost the size of Capital Bank, already Charlotte’s second-largest bank holding company by assets.

The two Charlotte-based bank holding companies, which disclosed the $350 million deal in November, said Wednesday the transaction could close on or about Oct. 26 now that the Federal Reserve, Federal Deposit Insurance Corp. and N.C. Office of the Commissioner of Banks have signed off. In purchasing CommunityOne, Capital Bank is expected to go from about $7.6 billion in assets to just under $10 billion.

The purchase of CommunityOne will also significantly expand Capital Bank’s presence in Charlotte, about seven years after former Bank of America executives Gene Taylor and Chris Marshall founded their company and began buying up distressed U.S. banks. Over that period, Capital Bank has developed bigger presences in places such as Miami, Raleigh and Nashville, Tenn., than in Charlotte, where Taylor and Marshall have lived since the company’s founding.

“We have always wanted to expand into Charlotte,” Marshall told the Observer on Wednesday, describing that desire as the “most important” factor behind the purchase. “We think Charlotte is one of the great cities in the U.S.”

Even before the deal, Capital Bank was the biggest bank holding company based in Charlotte behind Bank of America, with its roughly $2.18 trillion in assets. CommunityOne has $2.4 billion in assets.

In the Charlotte metropolitan area, Capital Bank expects the purchase will take it from about half a dozen employees in its SouthPark headquarters to about 100 across the region, as it absorbs CommunityOne employees, Marshall said.

Marshall said the purchase will also increase Capital Bank’s Charlotte-area branches to about 16, from about three currently. Capital Bank’s presence will also grow in other markets such as Asheboro, the headquarters for CommunityOne’s bank subsidiary.

As is typical in bank mergers, some job cuts are possible. Marshall said he doesn’t expect large-scale job reductions in any markets, but back-office jobs are among those that could be impacted. Plans are to retain customer-facing employees, he said.

“I couldn’t say there’s going to be zero job cuts in Charlotte,” Marshall said. “Over time, we expect the employment base to grow in Charlotte.”

The purchase comes after Capital Bank last year switched headquarters of its holding company to Charlotte from Coral Gables, Fla. – the state where it acquired some of its first failed banks.

Capital Bank executives have considered potentially relocating the headquarters of its bank subsidiary from Raleigh to Charlotte, but Marshall said Wednesday there are no plans to do that.

In the Charlotte area, Taylor, the CEO, said one area Capital Bank will put heavy focus is small businesses, a crucial client for community banks. In its other markets, Capital Bank has been able to grow in part by offering personalized service to such clients, he said.

The deal marks another community bank to be lost in a consolidation. In recent years, the industry has pointed to low interest rates and higher regulatory costs as creating pressure for such deals across the U.S.

In 2007, before the recession, the city of Charlotte was headquarters for seven community banks. After the Capital Bank deal, it will be home to four.

Deon Roberts: 704-358-5248, @DeonERoberts