First Citizens BancShares (NASDAQ:FCNCA) said Wednesday it agreed to buy 1st Financial Services in a deal that will allow the North Carolina bank to exit the federal Troubled Asset Relief Program.
The transaction, which requires approval from regulators and 1st Financial shareholders, is expected to close by the first quarter of 2014.
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The First Citizens Bank & Trust parent will pay $10 million in cash, out of which $8 million will go to the U.S. Treasury in order for 1st Financial to exit TARP. Shareholders of Hendersonville, N.C.-based 1st Financial will receive the remaining $2 million.
1st Financial operates 12 Mountain 1st Bank branches in western North Carolina, with $692 million in assets, $669 million in deposits and $363 million in loans as of June 30. Once the merger is completed, those locations will become First Citizens Bank branches.
“This agreement is a significant opportunity for us to expand our presence in our home state of North Carolina,” Frank B. Holding Jr., chairman and CEO of First Citizens, said in a statement. “We currently have a vibrant branch network and customer base throughout western North Carolina, and we look forward to the prospects of building on this foundation in an important market for us.”
First Citizens, which has $21 billion in assets and operates 402 First Citizens Bank branches in 17 states, has been an aggressive buyer of failed banks in the wake of the financial crisis. In 2011, the company purchased two failed banks in Colorado, United Western Bank and Colorado Capital Bank.