Sick banks are buzzard bait.

• Position: Charlotte

Nature has its own ways of repurposing its subjects. Vultures might feed on a dying animal, and bacteria consume what's left. Better that than cadavers piling up. The U.S. financial system has even less tolerance for clutter. Sickly banks are often killed--"failed" is the polite term--and sold quickly to healthy ones, so as not to spook customers.

[ILLUSTRATION OMITTED]

In the wake of the financial crisis of 2008, federal regulators essentially decided they needed more vultures. They expanded the pool of bidders for failing banks by creating "shelf charters," which allow approved private-equity groups to sit on inactive charters while raising funds. Bankers with ties to the Queen City hope to take advantage of that opportunity and make money while cleaning up the carnage. "Clearly, there's a fair amount of repair to the banking sector that's necessary, and I wanted to be part of that repair process," says Brian Simpson, a former capital-markets executive at Charlotte-based First Union Corp. who's now CEO of Union National Holdings LLC.

Union National and another Charlotte-based group, Blue Ridge Bank NA, have applied for shelf charters. Union National plans to raise $2 billion. Blue Ridge--led by CEO Milton Jones, who retired last year as president of Bank of America Corp.'s Georgia market--wants to raise $1 billion.

They should have plenty of prey. U.S. bank failures are on the rise--86 in just...