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http://66.225.205.104/JR20110427.mp3 Two struggling community banks in North Carolina hope to find strength by merging. Bank of Granite and FNB United, which is the parent company of

CommunityOne Bank, propose to join forces with the help of a $310 million dollar boost from private investors. The change signals the end of a 100-year legacy for Bank of Granite. Both Bank

of Granite and CommunityOne have been in bad shape because of sagging real-estate values and crumbling home loan portfolios. Both have been ordered by regulators to improve their finances or

be forced into a takeover. UNC Charlotte banking professor Tony Plath says a big move was inevitable. "Something's going to happen here. But the real question is, will that

something be a private market solution or a government assisted solution?" says Plath. Bank of Granite and CommunityOne have made a pitch for a private solution. Two well-known private

equity firms - The Carlyle Group and Oak Hill Capital Partners - will invest $155 million dollars in CommunityOne's parent FNB United. FNB United will then have to raise a matching $155

million from other investors, and if that happens it will acquire Bank of Granite through a stock transaction valued at about $13 million, based on Tuesday's closing share price. That

doesn't sound like much, but Plath says it's better than the alternative. "The FNB United shareholders would be getting about 15 cents a share and the Bank of Granite

shareholders will be getting about 52 cents a share - which is clearly better than bringing the government in, because in that case they'll get nothing," says Plath. A merger would

also preserve the North Carolina roots of two of the state's largest and most well-respected community banks. "Their names and reputations have been rock solid," says North

Carolina Bankers Association president Thad Woodard. "They have been outstanding community financial institutions that have suffered along with the rest of the country and all of us

from this recession. It's just absolutely a grand solution to a challenging situation." Barry Hayes calls it "a really sad occasion." Hayes is mayor of Granite Falls

where Bank of Granite is headquartered and has been the pride of the community since 1906. If the merger goes through, the new bank will be called CommunityOne and its headquarters will be

in Asheboro. "I grew up here in this town and Bank of Granite has been part of my life and part of the town's life," says Mayor Hayes. "They've been a great

corporate citizen, a great asset to the community. It's just like losing a relative or a good friend." The banks have not announced whether there will be layoffs in Granite Falls,

or whether any existing branches will be closed after the merger. Former First Union executive Brian Simpson will be the new CEO of CommunityOne Bank. An ex-Wachovia banker will be

president, and a number of banking veterans from Charlotte will serve on the board.