SPARTA, Mich. and FENTON, Mich. – ChoiceOne Financial Services, Inc. (NASDAQ: COFS), the parent company of ChoiceOne Bank, and Fentura Financial, Inc. (OTCQX: FETM), the parent company of The State Bank, have announced an agreement to merge in an all-stock transaction. The merger is expected to position the combined entity as the third-largest publicly traded bank in Michigan, with around $4.3 billion in total assets and 56 offices across the state.
The definitive merger agreement, approved by both companies' boards of directors, outlines the conversion of each share of Fentura common stock into 1.35 shares of ChoiceOne common stock. The transaction values Fentura common stock at $40.18 per share, or approximately $180.4 million in total, based on ChoiceOne's common stock closing price of $29.76 on July 24, 2024.
Subject to regulatory and shareholder approvals, the merger is slated for completion in the first quarter of 2025. Post-merger, ChoiceOne plans to expand its board to include two Fentura board members, bringing the total to 15 directors at the holding company level and 17 directors at the bank level.
ChoiceOne CEO Kelly Potes expressed enthusiasm for the merger, highlighting the century-long histories of both banks and their commitment to local communities in Michigan. The merger aims to enhance ChoiceOne's presence in Detroit's suburbs while expanding into the Flint and Saginaw markets.
Ronald Justice, President & CEO of Fentura, emphasized the cultural and value alignment of the two companies, expecting the merger to bolster their positions as leading community banks in Michigan. Shareholders are anticipated to benefit from increased liquidity and a significantly higher indicated dividend compared to Fentura's current dividend.
Financial advisory services for the transaction are being provided by Janney Montgomery Scott LLC to ChoiceOne and Hovde Group, LLC to Fentura, with legal counsel from Warner Norcross + Judd LLP and Dickinson Wright PLLC, respectively.
The information in this article is based on a press release.
In other recent news, ChoiceOne Financial Services has made significant strides in its financial operations.
The Michigan-based holding company for ChoiceOne Bank recently launched a public offering of its common stock, aiming to raise at least $30 million. This capital is set to bolster regulatory capital ratios and support its planned merger with Fentura Financial, Inc. The underwritten offering, managed by D.A. Davidson & Co., also includes an option for the underwriter to purchase an additional 15% of the shares sold within 30 days.
In addition to this, ChoiceOne has maintained its quarterly cash dividend at $0.27 per share, demonstrating stability in its financial performance. This recent dividend announcement aligns with the company's history of consistently distributing profits to its shareholders.
These are just a few of the recent developments for ChoiceOne Financial Services.
InvestingPro Insights
As ChoiceOne Financial Services, Inc. (NASDAQ: COFS) prepares to merge with Fentura Financial, Inc., investors are closely monitoring the performance and financial health of the company. Recent data from InvestingPro offers a snapshot of ChoiceOne's current standing in the financial market. With a market capitalization of $225.32 million and a P/E ratio of 10.48, the company presents a potentially attractive value proposition. The adjusted P/E ratio for the last twelve months as of Q1 2024 is slightly higher at 10.6, indicating a stable price to earnings landscape for ChoiceOne.
InvestingPro Tips highlight that ChoiceOne has a history of consistent dividend payments, having raised its dividend for 3 consecutive years and maintained payments for 31 consecutive years. This track record of dividend reliability could be a reassuring sign for investors looking for steady income streams, especially in light of the anticipated merger benefits. Additionally, analysts predict the company will be profitable this year, which is backed by a strong return over the last three months, with a 26.5% price total return.
While the company's revenue growth has seen a slight decline of -1.37% over the last twelve months as of Q1 2024, ChoiceOne's solid operating income margin of 34.67% and a dividend yield of 3.63% as of mid-2024 underscore its financial robustness. These figures suggest that despite revenue fluctuations, the company has maintained a healthy profit margin and continues to provide value to its shareholders.
Investors interested in a deeper dive into ChoiceOne's financials and future outlook can access additional InvestingPro Tips by visiting https://www.investing.com/pro/COFS. There are currently 7 more tips available, which could offer further insights into the company's performance and prospects. For those considering an InvestingPro subscription, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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