Pittsburghers head south.

• Author: Mildenberg, David
• Position: NC TREND: Triangle Region - Yadkin Bank Financial report - Financial report

Yadkin Financial's desire to sell itself was one of the worst-kept secrets in banking, but guessing the eventual buyer would have been a fool's errand. Why would Pittsburgh-based FNB spend $1.4 billion on Yadkin, a price expected to stunt its net worth for more than four years? Why would Yadkin cast its lot with a bank with no brand awareness or connection to North Carolina? Investors of FNB appeared perplexed, too: Shares declined 9% when the takeover was announced in mid-July. Six of eight analysts rate the company as a hold.

But peel back the onion a bit, and the story gets more interesting. Raleigh investor Adam Abram and Yadkin CEO Scott Custer started cobbling together a startup bank in 2010. Over the next seven years, they bought seven N.C. banks, most of them struggling with credit issues, and presto, Yadkin had assets of $7.5 billion. Benefiting from a rebounding economy and fewer bad loans, a share of Yadkin has increased 3.6 times since 2010, more than double the pace of its Southeast bank peers.

Bank regulations adopted since the 2009 financial crisis add significant costs once a company hits $10 billion in assets, so Yadkin faced a crossroads. The FNB purchase solves that issue. The Pennsylvania bank, which has doubled in size since 2011 by making nine acquisitions, has about $21 billion in assets, 330 offices and an aggressive, 51-year-old CEO, Vincent Delie Jr. By jumping over Virginia, where it does not operate, FNB violates an unwritten...