First Citizens BancShares in Raleigh, N.C., is set to increase its minority stake in a competing institution.

The Federal Reserve Board on Wednesday approved an application from the $33 billion-asset First Citizens to raise its stake in Carter Bank & Trust in Martinsville, Va., from 4.9% to 9%.

The Fed noted in its approval that First Citizens had provided commitments intended to ensure that it will not exercise, or seek to exercise, a controlling influence over the $4.9 billion-asset Carter Bank. First Citizens, for instance, will not attempt to exercise control over Carter Bank's management or policies, and it will not try to place anyone on the bank's board.

While Carter Bank and First Citizens compete directly in 32 markets in North Carolina and Virginia, the Fed noted that First Citizens had "provided additional commitments that help ameliorate the potential that this proposal will allow collusion or other anti-competitive behavior." The Fed said in its approval that First Citizens agreed that it would not try to obtain confidential or nonpublic financial information about Carter Bank.

First Citizens filed its application with the Fed last summer. Carter Bank noted at that time that, if the application was approved, First Citizens would become its second-biggest shareholder.

Carter Bank disclosed last month that it had been hit with a consent order requiring it to beef up compliance tied to the Bank Secrecy Act. The bank said in a letter to shareholders that regulators had advised it to increase the number of people in its BSA department from three full-time employees to "a minimum of 22."

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