Pilot Grove Savings Bank will acquire State Central Bank’s main Keokuk office and its Keokuk branch offices subject to regulatory approval, according to a joint news release issued today by State Central Bank Chairman William Logan and Pilot Grove Bank Chairman Daniel Steffensmeier.
Specifically, the following real estate will change hands in Keokuk: 601 Main St., 200 Main St., 201 Boulevard Road and 2122 Main St.
The four Keokuk offices will become branch offices of Pilot Grove Savings Bank.
Although State Central Bank is in effect leaving Keokuk after 155 years in the city, it will continue to operate offices in Bonaparte, Farmington, Stockport and Dubuque.
“The only change customers in those offices will encounter will be the relocation of the main office operations from Keokuk to the Bonaparte bank location,” according to the news release.
The decision to sell its Keokuk holdings signifies the result of “restructuring that started during the recession,” Tyler Logan of State Central Bank, said today. “This will complete it in a very positive fashion and give us one of the strongest capital (to loan) ratios in the state.”
The bank’s capital-to-loan ratio problems came to light in March 2010 when State Central Bank reported to the Federal Deposit Insurance Corporation that 10 percent of its loans were non-performing. At the time, two other Iowa banks were in similar straits, while about one-third of Iowa’s banks had about 2 percent or more of their loans categorized as non-performing.
“We have some customers who are struggling and we are working with them as they try to get through this recession,” Tyler Logan stated in May 2010. “We have increased our reserves as part of working with them.”
Among several of the bank’s troubled customers was Tri-City Energy, a biodiesel plant that failed due in part to volatile input costs.
“They were one of the customers who were struggling,” Tyler Logan said in 2010. “We have other customers like that, too. We had a second mortgage to them. When they sold it (Tri-City was sold in a bankruptcy sale in the fall of 2009), we didn’t get any money back on our second mortgage.”
In August 2011, the State Central Bank office in Fort Madison was acquired by Pilot Grove Savings Bank.
William Logan describes the Fort Madison acquisition as well as this most recent transfer of assets as positive actions.
“Our bank has always enjoyed a close working relationship with Pilot Grove Savings Bank and we believe our customers and the Keokuk community will benefit substantially from this acquisition by a respected neighboring bank with a strong and stable commitment to Southeast Iowa,” William Logan said. “Pilot Grove’s proven community responsibility and banking skills will provide our customers and friends in Keokuk with the very best in financial leadership.”
Pilot Grove Savings Bank, with offices in Pilot Grove, Houghton, Donnellson, West Point, Mount Pleasant, Packwood, Winfield, three locations in Fort Madison and another opening in Fairfield, is a full-service independent bank with more than $425 million in assets and more than 100 employees.
The bank is owned by its employees and 125 local stockholders with no single stockholder owning more than 5 percent of the stock.
Should this most recent acquisition deal be approved by the FDIC, it will be closed late in the fourth quarter of this year or the first quarter of 2014.
State Central Bank customers can call Tyler Logan or Joe Simmens, State Central Bank president and chief executive officer, at 524-1021 for more information.