First Citizens BancShares' latest acquisition is a merger that many believe should have happened years earlier.

The Raleigh, N.C., company has been an aggressive acquirer, with a focus on failed banks. On Tuesday, it announced a written-in-the stars deal, agreeing to buy First Citizens Bancorp. in Columbia, S.C., for more than $635 million.

The merger will join companies that are majority owned by the Holding family. It also continues a trend of mergers between banks that once resisted what outsiders viewed as inevitable pairings. Such deals are beginning to create a new generation of regional players.

"Merging will enable us to leverage the existing teamwork between our two banks and capitalize on each other's particular strengths," Frank Holding Jr., chairman and chief executive of the North Carolina company, said in a statement.

The companies share "a common culture and values, similar business philosophies and a commitment to customers, so the proposed merger makes sense," added Holding, who is also a director of First Citizens Bancorp. Holding is expected to run the company when the deal closes later this year.

The Holding family's interest in First Citizens BancShares dates back to 1918 when Robert P. Holding joined the bank as an assistant cashier. By the mid-1930s, he was president and chairman. In 1964, his three sons, including Frank Holding's father, bought the bank that would become First Citizens Bancorp.

The banks, while separate, have some overlap. The South Carolina bank's clients are allowed to conduct some transactions at First Citizens BancShares due to a processing arrangement. (First Citizens Bancorp. paid the North Carolina company nearly $26 million last year for consulting and data processing services.)

There are some distinctions, though. The $8.5 billion-asset First Citizens Bancorp. operates only in South Carolina and Georgia. The $22.2 billion-asset First Citizens BancShares has more than 400 offices in 17 states, including far-flung markets in California, Arizona and Colorado.

Still, industry observers say the merger has long made sense given the companies' common ownership, deep-rooted ties and similar brand names.

"This is a very logical deal and something they should have done a long time ago," says Lee Burrows, chief executive of Banks Street Partners, an Atlanta investment bank that has handled mergers in the Carolinas.

"The average person in their markets doesn't realize they are different banks," says Neil Grayson, a partner at Nelson Mullins. "I think a lot of people already thought it was one bank, so this might make life easier."

The merger's timing speaks to the forces that are pushing other banks to pursue highly anticipated deals.

"We know that, in order to compete and be successful well into the future, we must grow into a larger organization that operates more efficiently and effectively," Holding said. "Strategic mergers, executed with discipline and prudence, are an excellent way to achieve this."

In that regard, the merger is similar to the growing trend of multi-bank holding companies streamlining operations by collapsing bank charters.

"They're running separate banks and there's a lot of cost associated with that," says B.T. Atkinson, also a partner at Nelson Mullins. "We've seen holding companies do that with subsidiaries. Think about the costs associated with two bank holding companies."

Besides the forces associated with compliance and heightened regulation, First Citizens BancShares could also be eager to offset the dwindling value of assets covered by loss-share agreements with the Federal Deposit Insurance Corp. Analysts have identified declining accretable yield associated with failed-bank deals as a motivation for some serial buyers to pursue open-bank deals.

First Citizens BancShares disclosed in April that its first-quarter earnings fell 148% from a year earlier. The company said "expected declining loan balances within the FDIC-assisted loan portfolio" contributed to its declining profit.

Robert Barba is one of American Banker's community banking reporters.

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