The $317 million Five Star Credit Union in Dothan, Ala., signed an agreement Feb. 18 to purchase the $47 million Farmers State Bank in Lumpkin, Ga., the cooperative's second bank purchase in less than a year.
Though Five Star would not disclose financial terms of the deal, its President/CEO Bob Steensma, said the credit union got a nice deal because Farmers State Bank was facing financial challenges and had been up for sale for a while.
In May 2014, federal regulators approved Five Star's first bank acquisition of the $21 million Flint River National Bank in Camilla, Ga.
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Farmers State Bank, which serves about 2,800 customers, posted a year-to-date ROA of -0.74%, and a ROE of -20.20%, according to its financial performance reports filed with the FDIC. Since 2010, the bank recorded substantial declines in its real estate, commercial, agricultural and individual loan portfolio as well as net income losses, according to financial performance reports.
Nevertheless, Steensma said he is excited about the new purchase, the first publicly announced credit union acquisition of a bank in 2015.
Farmers State operates three branches, two in Stewart County and one in Quitman County in rural Southwest Georgia.
"There was no way we could build three offices for the price that we paid for the bank," Steensma said. "It wouldn't even have come close."
The acquisition will allow Five Star to expand its mission to serve low-income members and the underserved, he added.
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