Under the terms of the agreement, West Michigan Savings Bank will be consolidated into Sturgis Bank & Trust Company in an all-cash transaction valued at $4.0 million.
Assuming no purchase price adjustments, the per share transaction price payable to West Michigan Savings Bank shareholders for each share of West Michigan Savings Bank would be $400.00.
The ultimate purchase price is subject to adjustment in the event that West Michigan Savings Bank does not maintain a specified level of shareholders’ equity when the transaction closes or if the costs of funding and terminating West Michigan Savings Bank’s pension plan exceed a specified amount. Completion of the transaction is subject to approval by bank regulators and West Michigan Savings Bank’s shareholders, as well as other customary closing conditions.
The transaction is expected to be completed late in the first quarter of 2015.
Upon closing of the transaction, the operations of West Michigan Savings Bank will be consolidated into Sturgis Bank & Trust Company. The combined bank will have approximately $353 million in assets, $255 million in gross loans and $271 million in total deposits.
Sturgis Bank & Trust Company operates 11 branches across southwest Michigan and West Michigan Savings Bank operates a single office in Bangor, Michigan. Upon completion of the transaction, the West Michigan Savings Bank office will be operated as a branch of Sturgis Bank & Trust Company.
"The acquisition of West Michigan Savings Bank is a natural, synergistic extension of our presence in Van Buren County," stated Eric L. Eishen, President and Chief Executive Officer of Sturgis Bancorp, Inc. "We believe expanding our footprint into Bangor, with the addition of West Michigan’s solid core deposit base, will complement our existing business in South Haven nicely. Even more importantly, both organizations share a commitment to serving our local communities with quality products and personal care. We are excited to build upon the legacy that West Michigan Savings Bank has created during its 130 year history and expand upon the product offerings and level of service that its customers have come to expect. We also believe the transaction will be beneficial to our existing shareholders, as we expect it to generate double-digit annual earnings accretion from the outset, with a tangible book value dilution earn-back period of approximately three years." This transaction marks Sturgis’ first whole bank acquisition after a string of successful branch purchases over the last 25 years.
"We welcome the opportunity to join with Sturgis Bank & Trust Company," added Douglas E. Merriman, West Michigan Savings Bank’s President and Chief Executive Officer. "We have faithfully served the Bangor community for well over a century, but felt that partnering with another institution with greater scale and resources would be in the best interests of our shareholders and customers going forward. We are thrilled to be joining a strong community bank like Sturgis Bank & Trust Company which, like us, has been putting its customers first for more than 100 years."
Sturgis Bancorp, Inc. is being advised in the transaction by the investment banking firm of Boenning & Scattergood, Inc. and the law firms of Warner Norcross & Judd LLP and Dresser Dresser Haas & Caywood P.C. West Michigan Savings Bank is being advised by the investment banking firm of Donnelly Penman and Partners and the law firm of Bodman PLC.
