Dunlap, Tenn.-based Citizens State Bank is buying four branches of the Peoples State Bank of Commerce, as well as the deposits and loans at those branches.
Citizens, one of a few institutions that has grown during the recession, will acquire branches from Peoples in Dunlap, Whitwell, Jasper and South Pittsburg. Citizens manages almost $600 million in assets and has earned $2.5 million in net income so far in 2012, remaining profitable during the recession.
Geoff Post, president and CEO of Citizens State Bank, said he would bring "better mobile banking, personalized debit cards, a little bit better technology and a better product line" to the former customers of Peoples Bank. Citizens will retain all employees and three of the four branches, excluding the Jasper branch, he said.
Post noted that though Citizens is a bigger bank, it's still a community bank.
"In these smaller communities, I still think people relate to having a personal banker, knowing a person, being in church with them," Post said. "With all the uncertainty, it's just really important to know your banker."
Peoples State Bank has shrunk by a third during the recession from a high of almost $300 million in assets during the third quarter of 2010 to $206 million in assets today.
So far this year, Peoples State Bank has lost $425,000, after shedding $16 million in 2011, and has charged off more than $1 million in bad loans this year. The bank is operating under a consent order with bank regulators.
Mark Miller, an attorney for Peoples State Bank, said reducing the size of the bank was a strategic move.
"Like any institution, you have to evaluate if reducing your asset base for the time being will allow you to focus your organization and strengthen your efforts," Miller said. "Nothing will change for customers, they'll still have a community bank atmosphere."
Customers already have received notification of the purchase, he said.
"We think his bank will be stronger and our bank will be stronger, and I think for the customers, they're going to come out just fine," Miller said.