The $255 million Five Star CU in Dothan, Ala., announced thisweek that it plans to buy a small bank that has one location inGeorgia.

The 23,000-member Five Star and Flint River National Bank havesigned a definitive agreement that includes Five Star assuming thebank's deposits and accrued interest payable, and purchasing allloans, investments, real estate, accrued interest receivables, andother banking-related assets, valued at approximately $21 million(after a discount to the loan portfolio agreed to by the parties),the credit union said.

The deal is pending approval by the bank's shareholders, theNCUA, OCC, FDIC and state regulators, said attorney Michael Bell, who represents the credit union.

Five Star plans to assume operation of the bank's only locationin Camilla, Ga., the credit union said.

“We are extremely pleased to have the opportunity to expand ourmarket presence in southwest Georgia,” Five Star President/CEO BobSteensma said in a press release announcing the agreement. “Wewelcome FRNB's customers and employees to the FSCU family and lookforward to integrating ourselves into these additional communitiesin southwest Georgia.”

First Star was advised by Peter Williams of Feldman FinancialAdvisors in Washington, D.C., and the bank was advised by JoeMorton of the Hevad Group in Austin, Texas, the credit unionsaid.

Bell, a member of the law firm Howard & Howard in Detroit,said Wednesday that the deal will likely be finalized withoutlengthy delay because regulators have become increasinglycomfortable with credit unions buying banks.

“This is nothing new to them anymore since many similaragreements have been reached during the past few years,” headded.

Other similar deals that have been finalized during the past fewyears include:

• The $1.5 billion United Federal Credit Union in St. Joseph, Mich., acquiredGriffith Savings Bank.
• The $2.1 billion Landmark Credit Union in New Berlin, Wis., purchased the $190million Hartford Savings Bank.
• The $352 million GFA Federal Credit Union of Gardner, Mass., bought MonadnockCommunity Bank.

Bell said he expects other credit unions to buy banks, especially in NewEngland and the Southeast.

“I am working with several other organizations that areconsidering similar agreements, but I can't discuss specificdetails at this time,” he said. “Within the next six to eightmonths, I expect we will see about five more credit unions buyingbanks.”