ChoiceOne Financial Services, Inc. (NASDAQ: COFS) (“ChoiceOne”), the parent company of ChoiceOne Bank, and Fentura Financial, Inc. (OTCQX: FETM) (“Fentura”), the parent company of The State Bank, today announced the signing of a definitive merger agreement pursuant to which ChoiceOne and Fentura will merge in an all-stock transaction. The agreement was unanimously approved by the boards of directors of both companies.
Once completed, the combination will create the third largest publicly traded bank in Michigan with approximately $4.3 billion in consolidated total assets and 56 offices in Western, Central and Southeastern Michigan. The proposed transaction is expected to close in the first quarter of 2025, subject to the satisfaction of customary closing conditions, including receipt of approval from Fentura and ChoiceOne shareholders and receipt of all necessary regulatory approvals.
Under the terms of the merger agreement, each share of Fentura common stock outstanding immediately prior to completion of the merger will be converted into the right to receive 1.35 shares of ChoiceOne common stock. The proposed transaction is valued at $40.18 per share of Fentura common stock, or approximately $180.4 million in the aggregate, based on the closing price of ChoiceOne’s common stock of $29.76 on July 24, 2024. For additional information about the proposed merger, please see the Investor Presentation – Merger, filed as Exhibit 99.4 to ChoiceOne’s Form 8-K filed on July 25, 2024.
Subject to NASDAQ independence standards and existing corporate governance procedures, upon completion of the proposed transaction, ChoiceOne intends to appoint two members of Fentura’s board to join the holding company board of ChoiceOne, which would be comprised of 15 total directors. Two additional members of Fentura’s board will also be appointed to join the board of ChoiceOne Bank, which would be comprised of 17 total directors.
“We are thrilled to announce the proposed combination of two 125+ year old community banks. Fentura is a well-run institution and a natural geographical extension for ChoiceOne. This transaction will allow ChoiceOne to strengthen its presence in the suburbs of Detroit while adding the markets of Flint and Saginaw. We remain committed to our local Michigan communities, and this transaction will enhance that commitment,” said ChoiceOne Chief Executive Officer, Kelly Potes.
“This is an exciting time for our customers, communities, employees and shareholders as we move into the next phase of the combined company’s growth together,” said Jack Hendon, Chairman of ChoiceOne Financial Services, Inc. “Both companies are similar in their culture, rich history, values and commitment to serve their respective customers and communities. The proposed combination will allow us to expand our collective expertise and enhance our product offering to better support our customers.”
“Identifying the right partner with a compatible culture was crucial when we evaluated this proposed transaction,” said Ronald Justice, President & CEO of Fentura. “Fentura and ChoiceOne share remarkably similar cultures and values. Both are robust, growing institutions deeply dedicated to customer service and community engagement. By harnessing these strengths in our proposed combination, along with our complementary products and prominent market positions, we believe we will establish ourselves as one of Michigan’s premier community banks. We believe our shareholders will benefit from significantly greater liquidity and an indicated dividend which will be more than three times higher than our current dividend.”
“Combining two thriving banks will enable us to provide a wider array of services and build a deeper bench of expertise within our communities,” said Brian Petty, Chairman of Fentura. “Our combined customer base anticipates outstanding service across various delivery channels. With each bank boasting more than 125 years of dedicated customer service, we aim to establish ourselves as the leading financial institution in our markets.”
Janney Montgomery Scott LLC is serving as financial advisor and Warner Norcross + Judd LLP is serving as legal counsel to ChoiceOne. Hovde Group, LLC is serving as financial advisor and Dickinson Wright PLLC is serving as legal counsel to Fentura.
