Regional Bank F.N.B. to Expand South

F.N.B. Corp. plans to buy Yadkin Financial Corp. in a tie-up that would continue the slow but steady consolidation of regional lenders, which are grappling with low interest rates and increased regulatory costs.

The all-stock deal could be announced Thursday, according to a person familiar with the matter, assuming it doesn't fall apart at the last minute. Terms couldn't be learned, but the deal is likely to be valued near or above Yadkin's current market capitalization of $1.3 billion.

Pittsburgh-based F.N.B., with a market value of $2.8 billion, owns First National Bank of Pennsylvania and operates more than 300 branches in Pennsylvania, Ohio, Maryland and West Virginia.

It also provides wealth management, insurance and consumer-finance services. Buying Yadkin, which is based in Raleigh, N.C., would expand F.N.B.'s banking footprint into North Carolina and South Carolina.

F.N.B. has about $20 billion in assets after having done a string of acquisitions recently. Yadkin has more than $7 billion in assets.

Midsize lenders are among the most active deal makers in the financial industry these days, as larger banks sit on the sidelines amid heightened regulatory scrutiny since the financial crisis.

Smaller banks face pressure to grow or try to sell themselves, as low interest rates sap profits and regulatory costs mount. By becoming larger, they can spread costs over a broader base of customers and assets.

While there are still thousands of banks in the U.S., most of which are tiny compared to national lenders, there has been steady consolidation among them in recent years.

Such activity has ticked up lately. Through June 29, $14.8 billion worth of U.S. bank mergers had been announced, compared with $20.2 billion in the same period in 2015, according to Dealogic.

More than 60% of directors and executives at banks say their firms have to have $1 billion in assets or more to be competitive, according to a survey by trade publication Bank Director late last year. When a similar question was asked in 2012, only 36% of officials felt their banks had to have that level of assets.

A number of other bidders took part in the auction of Yadkin, which was run by investment bank Sandler O'Neill & Partners LP, according to people familiar with the matter. They include First Horizon National Corp. and Canada's Toronto-Dominion Bank, which already has significant U.S. operations, one of the people said.

Emily Glazer

Write to Rachel Louise Ensign at [e-mail]

(END) Dow Jones Newswires

July 21, 2016 01:25 ET (05:25 GMT)

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