ChoiceOne Financial Services in Sparta, Mich., has agreed to buy Fentura Financial in Fenton, Mich.
The $2.6 billion-asset ChoiceOne said in a press release that it will pay $180.4 million in stock for the $1.8 billion-asset Fentura. ChoiceOne also announced that it will raise at least $30 million in a stock offering.
The deal, which is expected to close in the first quarter, priced Fentura at 134.6% of its tangible book value.
Two Fentura directors will join ChoiceOne’s board. The majority of Fentura’s senior management is expected to have leadership roles at ChoiceOne Bank.
“Fentura is a well-run institution and a natural geographical extension for ChoiceOne,” Kelly Potes, ChoiceOne’s CEO, said in the release. “This transaction will allow ChoiceOne to strengthen its presence in the suburbs of Detroit while adding the markets of Flint and Saginaw.”
The deal is expected to be more than 30% accretive to ChoiceOne’s 2025 earnings per share. It should take less than three years for the company to earn back an estimated 18.2% dilution to its tangible book value.
ChoiceOne plans to cut about 28% of Fentura’s annual noninterest expense. The company expects to incur $18.7 million of merger-related charges.
Janney Montgomery Scott and Warner Norcross + Judd advised ChoiceOne. Hovde Group and Dickinson Wright advised Fentura.