Fentura Financial in Fenton, Mich., has agreed to buy Farmers State Bank in Munith, Mich.
The $1.3 billion-asset Fentura said in a press release last week that it will pay $15.5 million in cash for the $104 million-asset Farmers State. The deal, which is expected to close in the fourth quarter, priced Farmers State at 176% of its tangible book value.
Fentura said the deal should be 12% to 14% accretive to its earnings per share in each of the first two years after closing. It should take less than four years for the company to earn back a projected 6.1% dilution to its tangible book value.
Farmers State has three branches, $45 million of loans and $95 million of deposits. The deal allows Fentura to add locations southwest of its existing footprint.
“The combination brings together two organizations that believe in community banking and a shared commitment to serving our clients and local communities,” Ron Justice, Fentura’s president and CEO, said in the release.
“The resulting bank operations will further enhance our strong core deposit base, allowing us to enhance shareholder value by taking advantage of asset growth opportunities and expansion into new market areas,” Justice added.
Jeanne Richter, Farmers State’s president and chief financial officer, will join the senior management team of Fentura’s bank. Craig Goodlock, Farmers State’s chairman and CEO, will retire.
Fentura plans to cut about $1.2 million of annual noninterest expenses. The company will incur about $1.7 million of merger-related expenses.
Fentura was advised by ProBank Austin and Howard & Howard Attorneys. Farmers State was advised by Donnelly Penman & Partners and Bodman.