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.
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