FNB United Corp. says it has fulfilled a key contingency for its acquisition of Bank of Granite

The parent company of CommunityONE Bank says investors have agreed to subscribe for a total of $310 million in company common stock in a private placement, contingent on obtaining shareholder and regulatory approvals and satisfaction of other conditions, a news release said. Issuance of the common stock at 16 cents per share will complete the recapitalization of FNB United, which is a key contingency in its plan to acquire Bank of Granite Corp., parent company of Bank of Granite.

The proposed acquisition will unite two 100-year-old institutions, creating a North Carolina community banking organization with $2.8 billion in assets, $2.4 billion in deposits and 63 full-service banking offices located in some of the state's most robust markets.

"Completion of the capital raise is a significant event for community banking in North Carolina," said Brian Simpson, who will serve as CEO of the combined organization. "Two banking companies that have served their communities faithfully for more than 100 years will be revitalized so that the traditions of service to business owners and consumers can continue. We believe this is positive news for each of the communities served by CommunityONE and Bank of Granite and for our entire state."

The Carlyle Group and Oak Hill Capital Partners are lead investors in raising the capital, each having entered into definitive agreements with FNB United to invest $79 million, each subject to conditions contained in the investment agreements, the release said. FNB United has now entered into additional definitive subscription agreements with additional investors providing the investment of the remaining capital of $152 million, subject to conditions contained in the subscription agreements.

"This strong and experienced leadership team is well positioned to address current challenges and build for the future," said Jim Burr, managing director of The Carlyle Group. "The revitalization of any bank franchise begins with seasoned leadership, and Brian, Bob and their team have the depth and breadth of experience needed for this opportunity."

FNB United will be headquartered in Asheboro. Subject to the satisfaction or waiver of the remaining conditions, the transaction is expected to close in October 2011. The two bank subsidiaries (CommunityONE and Bank of Granite) will be operated as separate entities for a period of time. It is anticipated that the merged bank will be named CommunityONE Bank at a future date to be determined, the news release said.

"Brian and I have been gratified by the response we have received from the investment community," said Bob Reid, who will serve as president of the combined banking company. "A great deal of work remains ahead, but with this commitment of capital and the talented teams being put in place at CommunityONE and Bank of Granite, we believe that the resulting institution will be positioned to effectively serve its communities in the future."

Jim Campbell, chairman of FNB United, said, "I would like to commend all of our employees for their commitment to customer service as we have navigated through these challenging times. This focus on the customer has been invaluable in assuring that we are well-positioned for the revitalization that is planned with our new capital and our new banking partners."

John Bray, chairman of Bank of Granite, added, "The success of the capital raise is great news for our customers, our employees and the communities we serve. CommunityONE and Bank of Granite have long traditions of personalized service that is a hallmark of community banking. The addition of capital and the merger of our organizations will ensure that this spirit lives on."

FNB United Corp. is the Asheboro-based bank holding company for Community-ONE Bank, which operates 45 offices in 38 communities throughout central, southern and western North Carolina.

Bank of Granite operates 18 full-service banking offices in seven North Carolina counties - Burke, Caldwell, Catawba, Iredell, Mecklenburg, Watauga and Wilkes.