Capital Bank CEO Gene Taylor, left, and Chief Financial Officer Chris Marshall. ROBERT LAHSER rlahser@charlotteobserver.com
Capital Bank CEO Gene Taylor, left, and Chief Financial Officer Chris Marshall. ROBERT LAHSER rlahser@charlotteobserver.com

Bank Watch

News and notes on Charlotte's banks and the financial industry

Bank Watch

Another Charlotte bank is getting swallowed up in a merger

May 04, 2017 10:06 AM

UPDATED May 04, 2017 04:34 PM

Charlotte-based Capital Bank Financial Corp. said Thursday it will be acquired by Memphis, Tenn.-based First Horizon National Corp., the latest Charlotte bank to get swallowed up in a merger within a week.

First Horizon will merge with Capital Bank, Charlotte’s second-largest bank holding company by assets, in a $2.2 billion deal that still needs approval from regulators and shareholders of both companies. The combined company is expected to have $40 billion in assets, as First Horizon’s $30 billion combines with Capital Bank’s $10 billion.

For Charlotte, it’s the latest instance of a locally based bank combining with another, at a time when similar consolidations of community or regional banks continue across the U.S.

Exactly a week ago, Charlotte-based Park Sterling Bank announced plans to merge with South State Corp. of Columbia, S.C. – a deal expected to result in Park Sterling branches switching to the South State brand and the combined company being headquartered in Columbia. Also last week, Raleigh-based Paragon Bank agreed to be acquired by one of the largest banks headquartered in Virginia in an all-stock deal valued at $323.7 million.

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Bankers have cited higher regulatory costs, such as those from 2010’s Dodd-Frank financial overhaul law, as among factors driving industry consolidation. Becoming bigger through combinations better enables banks to absorb such costs, bankers say.

In a statement, First Horizon CEO Bryan Jordan said the combination with Capital Bank will help his company, the biggest bank in Tennessee by deposits, more quickly achieve its “critical” financial targets. The companies said the merger will create the fourth-largest regional bank in the Southeast by assets.

Terms of the deal call for First Horizon to retain its First Tennessee brand in Tennessee, although branches elsewhere will use the Capital Bank name. The combined company will have more than 300 branches in Tennessee, North Carolina, South Carolina, Florida, Mississippi, Georgia, Texas and Virginia.

The announcement comes after Capital Bank in 2015 switched headquarters of its holding company to Charlotte from Coral Gables, Fla. – the state where it acquired some of its first failed banks after former Bank of America executives Gene Taylor and Chris Marshall founded the company in 2009.

Capital Bank recently completed its purchase of another Charlotte-based bank, CommunityOne Bancorp, a deal that closed in October and expanded Capital Bank’s assets to about $10 billion from about $7.6 billion. Over the years, 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.

Taylor, Capital Bank chairman and CEO, will become vice chairman of First Horizon and join its board, according to the companies. In a statement, Taylor said the merger will create new opportunities for growth at the companies.

“The strategic fit between the two organizations is compelling, especially for our valued customers who will benefit from the enhanced balance sheet strength and broader array of products and services offered by a $40 billion Southeastern bank,” he said.

Closing of the acquisition is expected in the fourth quarter of this year.

Deon Roberts: 704-358-5248, @DeonERoberts