The $225 million Five Star Credit Union of Dothan, Ala., emerged Friday as the successful bidder for the ailing $38 million Frederica CU of Brunswick, Ga. but what has turned industry heads this week is the high number of potential bidders: 18 .

There was no explanation from the NCUA about the higher than normal number but the president/CEO of Five Star, Robert Steensma, said a positive factor is Frederica's branch presence on St. Simon's Island, a popular southeast Georgia tourist haven.

The CU itself, with 3.29% net worth, has endured a tough financial road and was on an NCUA emergency purchase list, said Steensma.

Frederica, which suffered sharp hits on its adjustable rate mortgage portfolio, lost $1 million in 2011 and $1.8 million the year before.

At a Jan. 19 potential bidders meeting at a Brunswick hotel, there were bidders from all over the South and as far away as Michigan, Steensma said. “We decided we were interested and we apparently made them the most attractive offer,” he said.

Steensma, whose CU was on the NCUA's merger registry as a pre-approved suitor, told Credit Union Times that he counted CEOs and managers “from all over—Navy Federal, Associated, Georgia's Own, Vystar—but as the meeting wore on I could tell from the body language which of them were really interested after hearing about the financials.”

But even before the hearing conducted by Herbert Yolles, the NCUA's Atlanta-based Region III director, Steensma said he could size up the competition based on CEOs present versus senior managers.

“You kind of knew that if (Navy Federal CEO) Cutler Dawson or any of the other attending CEOs weren't there, they really weren't as interested,” said Steensma.

He said his CU “was quick on the trigger because we knew it would be a good fit for us despite the problems and we did agree to a no-cost bid.” That means Five Star CU did not demand upfront NCUA funds to handle the takeover of a CU which he said had a majority of its portfolio in mortgages.

The merger was made effective Wednesday and adds 3,000 new members and Frederica's two offices on St Simon's Island and in Brunswick. The combined CU has 23,000 members.

“The merger positions the combined organization to serve members throughout Southeast Alabama and South Georgia and provides an opportunity for expansion during what has been a difficult economy,” Steensma said in a formal statement.

Five Star is now working on integration of member accounts in a process that will continue into 2013, Steensma said. As a result of the merger, Five Star will have two additional branches in Georgia to go along with its existing network. Steensma expressed gratitude to the NCUA for helping to speed the transaction.

He said Five Star received official notification of its winning bid on Feb. 7.

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