North Carolina Bank Yadkin Financial Said to Explore Sale

  • Raleigh-based lender said to work with Sandler O’Neill
  • Community bank mergers driven by regulatory pressures

Yadkin Financial Corp., a North Carolina community bank, is exploring a sale, according to people familiar with the matter.

The Raleigh-based lender is working with Sandler O’Neill & Partners LP to solicit offers, said the people, who asked not to be identified because the matter isn’t public. There is no assurance that a deal will happen and the bank may decide to remain independent.

Yadkin’s shares rose as much as 7 percent Wednesday from the prior close of $26.34, and were trading at $27.14 at 11:45 a.m. in New York.

Representatives for Yadkin and Sandler declined to comment.

Yadkin, with a market value of about $1.4 billion, is the largest so-called community bank -- an industry term for lenders with less than $10 billion in assets -- based in North Carolina. These types of lenders are facing increasing pressure to sell or merge with rivals as they get bigger in the wake of the Dodd-Frank Act, which calls for heightened regulatory scrutiny of banks with more than $10 billion in assets. Banks want to be as big as possible when they cross that threshold to absorb the higher compliance costs.

This dynamic spurred Michigan-based Chemical Financial Corp.’s merger, which was announced in January, with Talmer Bancorp., also in Michigan. Little Rock, Arkansas-based Bank of the Ozarks Inc.’s deal announced in October to merge with Atlanta’s Community & Southern Holdings Inc. was driven by the same issues.

Yadkin has $7.4 billion in assets and 110 branches in North Carolina and South Carolina, according to its website. In March, it closed the purchase of NewBridge Bancorp.

The bank’s two largest shareholders are private equity firms Lightyear Capital and Stone Point Capital, which each own about 4.5 percent of its outstanding shares, according to data compiled by Bloomberg.

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