NewBridge Bancorp (NBBC) in Greensboro, N.C., is acquiring a cash-strapped mutual at the behest of state regulators.

NewBridge will acquire the $224 million-asset Security Savings Bank in Southport, N.C., in a supervisory conversion that it expects to be ordered by the North Carolina banking commissioner, NewBridge said Thursday.

The $1.7 billion-asset NewBridge will pay nothing to acquire Security Savings.

Ray Grace, the banking commissioner of North Carolina, did not immediately respond to an email seeking comment.

NewBridge expects the deal to close by Oct. 1, and it plans to begin integrating Security Savings' seven North Carolina offices in the fourth quarter.

Security Savings was unable to raise enough capital to stay independent, its chief executive, Henry Edmund, said in a news release.

Security Savings had a Tier 1 leverage ratio of 2.74% and total risk-based capital of 5.59% as of the end of April, with approximately $12 million of combined loss reserves and regulatory capital, according to the Federal Deposit Insurance Corp. Its asset base has shrunk by nearly a quarter in the last year, although it made a $138,000 profit in the first quarter.

NewBridge's bank unit is well capitalized; it had a Tier 1 ratio of 9.18% and total risk-based capital of 12.76% at the end of April, according to the FDIC. NewBridge completed a $56 million capital raise earlier this year, after liquidating $45 million in bad loans. Last month it paid $7.6 million to repurchase the warrant it issued the Treasury Department through the Troubled Asset Relief Program.

"We are pleased that with the overwhelming success of our 2012 capital raise and asset disposition plan, we are now prepared to focus on fulfilling our original vision — to leverage our existing infrastructure through organic growth and strategic consolidation," NewBridge President and Chief Executive Pressley Ridgill said in the news release. "The acquisition of Security Savings Bank follows this vision and will provide significant benefits to the constituencies of both institutions."

Regulators can permit the merger of a mutual and a shareholder-owned bank if one of the institutions is severely undercapitalized and a conversion is likely to improve its financial condition, said Kip Weissman, a partner at Luse Gorman Pomerenk & Schick, which is not involved in the deal. Security appears to "easily" meet those standards, said Weissman, who added that the conversion is "not surprising" given the mutual's financial condition.

In May, in the most recent supervisory conversion, First Dakota National Bank in Yankton, S.D., acquired Bank 360 in Beresford, S.D.

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