Advia Credit Union (Parchment, MI) has announced that it plan to acquire Golden Eagle Community Bank (Woodstock, IL).
The deal awaits bank shareholder and regulators approvals.
Golden Eagle Community Bank has $155 million in assets and three offices.
When the deal is completed, this will be the third bank acquired by #1.7 billion Advia CU.
The price tag of the deal was not disclosed.
The transaction is expected to be completed in the second quarter of 2019.
Read the press release.
Advil for Advia? As an attorney who sits on the board of a bank who has done acquisitions in the past, I like to look at these transactions, so let’s do a little analysis here.
ReplyDeleteMerger #1 – Mid America, lost money in each of the four years leading up to the merger and had negative asset growth in each year as well.
Merger #2 – Peoples, was a consistent bottom quartile performer.
Merger #3 – Golden Eagle, is a consistent bottom quartile performer.
Prior to the mergers, Advia was sitting on 40 million dollars of excess capital. If they would have paid that out to their shareholders, they would still have over nine percent capital.
Since that time, Advia has grown, but not realized any economy of scale. Their expense to asset ratio has gone from 3.70 to 4.00 and their ROA has gone from 1.00 percent to 0.75 percent.
Our bank stockholders would not tolerate this waste of capital. Why should Advia’s? Who is standing up for the shareholders there? I wonder if Advia’s shareholders could have received a better rate of return investing the excess capital themselves.
Great comments. CU Member's don't care about capital (or don't know) and therefore this is what you get.
DeleteI'm willing to bet each of these purchases were well in excess of book value, and probably more than another bank would ever pay. If none of the local market banks want to buy the bank, why would an out of state CU? It appears to be ego purchases
Exactly
ReplyDeleteNot just the cu ego but the advisors and NCUA.
ReplyDeleteIf these banks were good ideas, a bank would have been bidding too.
Way to hide behind your anonymous postings :)
ReplyDelete