Carlyle, Oak Hill in $155m bank merger

The firms will invest $77.5m each in the merger of FNB United and Bank of Granite as part of a $310 million private placement of FNB United’s stock.

The Carlyle Group and Oak Hill Capital Partners have agreed to invest $77.5 million each in the merger of FNB United and Bank of Granite.

The investment comes as part of a $310 million private placement of FNB United’s stock. Carlyle and Oak Hill will each receive approximately 484 million shares in the company, not to exceed 24.9 percent of the outstanding shares. The merger between the two banks will create a North Carolina community banking organisation with approximately $2.9 billion in assets and 63 banking offices in the US.

The combined parent company will be called FNB United and will be operated by new management, led by chief executive officer Brian Simpson and president Bob Reid.

Simpson is a former senior executive at First Union Corporation with 17 years of experience in banking. Reid has 30 years of financial services experience, having held a number of leadership positions at Wachovia and First Union.

The transaction is expected to close by the end of the third quarter, after which the two banks will be operated as separate entities until a future date when the merged bank will be named CommunityOne Bank.

Carlyle is no stranger to investing in financial institutions. Last November, the firm invested $98 million in US-listed Central Pacific Financial, a Hawaii-based financial institution. In May 2010, Carlyle purchased at least $73 million in common stock from Virginia-based Hampton Roads Bankshares as part of an expected $255 million capital raise from the bank owner and operator.

Carlyle invests in banks and other financial institutions from its Global Financial Services fund, which also invests in insurance companies and asset managers. The firm closed the fund, which it had been raising since May 2008, on $1.1 billion in April 2010.