First Citizens Bancshares (FCNCA) in Raleigh, N.C., has agreed to buy 1st Financial Services in Hendersonville, N.C.

The companies said Wednesday that First Citizens will pay $10 million in cash for the $692 million-asset 1st Financial. Of that amount, $8 million will go to the Treasury Department to allow 1st Financial to exit the Troubled Asset Relief Program; the remaining cash will go to the seller's shareholders.

The companies expect to complete the transaction by March 31.

The $21.3 billion-asset First Citizens, an aggressive buyer of failed banks in far-flung markets after the financial crisis, will gain 12 branches in western North Carolina, $669 million in deposits and $363 million in loans.

"This agreement is a significant opportunity for us to expand our presence in our home state," Frank Holding Jr., First Citizens' chairman and chief executive, said in a press release. "We currently have a vibrant branch network and customer base throughout western North Carolina, and we look forward to the prospects of building on this foundation."

Sandler O'Neill was the financial advisor for 1st Financial.

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