United we stand: that's how some banks on the Financial 100 keep from falling. Others want to merge to surge into new markets.

• Author: Campbell, Spencer
• Position: FEATURE

At first glance, the proposed merger of FNB United Corp. and Bank of Granite Corp. looks like a bad match. Despite their sizes--both are in our Financial 100 ranking of the state's largest banks, thrifts and credit unions--their vitals are weak. In 2010, Asheboro-based FNB had the worst return on assets and equity of any institution on the list. Bank of Granite, based in Hickory, was among the top 10 in 2006 but has fallen to 30th. Combined, they lost $136.6 million last year. The merger is dependent on FNB getting $310 million in capital, half of which it doesn't have.

In actuality, their union could thrive, says Tony Plath, associate professor of finance at UNC Charlotte. FNB's Greensboro branches and Bank of Granite's in Mecklenburg County give the new bank--it will do business as FNB's subsidiary, CommunityOne Bank--a presence in two of the state's fastest-growing markets. Its $2.8 billion in assets will give it a bigger cushion against the cost of new federal regulation. Close a few of its rural branches, Plath says, "and you've got yourself a dandy little $3 billion bank." If FNB can't find an additional $155 million, however, the merger will remain a fantasy.

Whatever its outcome, the merger is illustrative of an interesting development in the Financial 100: Through mergers and acquisitions, some troubled banks are starting to get the capital they need to survive. The deals also allow buyers to expand quickly into desirable markets. The Financial 100's biggest climber, Charlotte-based North American Financial Holdings Inc., made its ascent by buying two banks--it also bought three shuttered institutions from the Federal Deposit Insurance Corp.--including No. 11 on last year's list, Raleigh-based Capital Bank Corp. Last year, North American wasn't even on the Financial 100, which is based on revenue. This year, it's No. 14.

Burlington-based MidCarolina Financial Corp., No. 42 and operating under a regulatory consent agreement, plans to merge with Danville, Va.-based American National Bankshares Inc. Charlotte-based Park Sterling Bank, No. 45, bought a South Carolina bank. "We're beginning to see some deals get done," says Ray Grace, N.C. deputy commissioner of banks. "We're beginning to see a bit of thawing. That's a good thing."

ASSETS (MILLIONS) Bank of America $2,268,347.4 BB&T 157,081.4 State Employees' 21,463.2 First Citizens BancShares 20,806.7 North American Financial 3,494.6 First Bancorp 3,280.0 Yadkin Valley Financial 2,300.6 BNC Bancorp 2,149.9 Coastal Federal 1,944.3 FNB United 1,921.3 First Carolina Corporate 1,917.7 NewBridge Bancorp 1,807.2 HomeTrust Bank 1,669.8 Southern Community Financial 1,662.0 Square 1 Financial 1,584.3 BEST RETURN ON ASSETS Banks and S&Ls Live Oak Banking 4.51% Union Bank & Trust 1.37 Roxboro Savings Bank 1.02 Citizens South Bank 0.95 First Citizens BancShares 0.92 Providence Bank 0.71 Credit unions Charlotte Metro Federal 1.21 State...