Carolina First BancShares plans to pay as much as $1.5 million for a 20% stake in a bank that has not yet opened for business.

The Lincolnton, N.C.-based banking company sees First Gaston Bank of North Carolina as an investment that's too good to pass up, said James E. Burt 3d, president of Carolina First, a $309 million-asset banking company.

"We think it makes a lot of sense for us," Mr. Burr said. "We think the bank has an excellent prospect for success."

Alex Hall, president and chief executive of the proposed bank, expects to receive approval to operate from North Carolina's banking commissioner by September, and he hopes to open a main office in Gastonia and a branch by early next year.

The bank is selling from 600,000 to 700,000 shares at $11 each. Mr. Hall said $5 million had already been raised from local investors since the offering began in July. It is slated to end in September but will likely be extended into December.

Mr. Burt said Carolina First knows the organizers and likes the quality of the management. In fact, Carolina First's chairman, D. Mark Boyd 3d, is an organizer of the new bank.

"It's an arm's-length transaction," Mr. Burt said.

Carolina First anticipates handling First Gaston's data-processing needs and providing audit services for a fee. Mr. Burt said the agreement would save the start-up money because it won't have to hire and train new employees. First Gaston will also be able to sell mortgage loans to Carolina First.

"They will pay a fair market price for that just as they would with any vendor," Mr. Burt said. "They are getting a bargain and it is an important piece of fee income for us."

Mr. Hall said the arrangement doesn't mean Carolina First is "staking out" First Gaston for a future acquisition. He said with Carolina First's help the bank can become profitable in less than 18 months, which is highly unusual for newly chartered banks.

"We will run our own show," he said. "We feel very comfortable. We look at that [the Carolina First relationship] as one of our advantages. We have a very successful bank kind of mentoring us through the process."

Indeed, Carolina First has a solid track record. For the first six months of the year it earned a record $1.6 million, up 23% over the previous year.

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