ChoiceOne Financial Services, Inc. (OTC: COFS) (“ChoiceOne”), the parent company of ChoiceOne Bank and Lakestone Bank & Trust, and Community Shores Bank Corporation (OTC: CSHB) (“Community Shores”), the parent company of Community Shores Bank, jointly announced today the signing of a definitive merger agreement pursuant to which ChoiceOne will acquire Community Shores. The combination, a stock and cash transaction, will create an approximate $1.5 billion asset bank holding company with 33 offices in West and Southeastern Michigan. The transaction is expected to close in the second quarter of 2020, subject to the satisfaction of customary closing conditions, including receipt of approval from Community Shores shareholders and receipt of regulatory approvals. The transaction was unanimously approved by the boards of directors of both companies.
ChoiceOne is an approximately $1.3 billion asset bank holding company with 29 offices serving West and Southeastern Michigan. Community Shores is an approximately $204 million asset bank holding company with 4 offices serving Muskegon and Ottawa Counties. Banking News
“Joining forces with Community Shores is a natural geographical and cultural fit for ChoiceOne. It allows ChoiceOne to extend our footprint into Muskegon and Ottawa counties and enhance the commitment that both Community Shores Bank and ChoiceOne Bank have to our Michigan customers and communities,” said ChoiceOne Chief Executive Officer, Kelly Potes.
The consolidation of Community Shores Bank with and into ChoiceOne Bank is expected to occur in the second half of 2020. At that time, Community Shores Bank CEO and President, Heather Brolick, will continue with ChoiceOne Bank as its Senior Vice President – Human Resources. Community Shores Bank Chief Lending Officer, Brent McCarthy, will serve as Vice President — Muskegon Market Executive for ChoiceOne Bank.fintech news
“With similar cultures, values and commitments to our local communities, this merger will allow both organizations to better serve our customers in Muskegon and Ottawa counties,” said Ms. Brolick. “Both ChoiceOne Bank and Community Shores Bank have deep roots in West Michigan. This merger will allow us to enhance our impact on the local community, as well as combine our service cultures and ChoiceOne’s technology enhancements to better serve our customers.”
Under the terms of the merger agreement, each share of Community Shores common stock outstanding immediately prior to the merger will be converted into the right to receive, at the election of each Community Shores shareholder, an amount of cash equal to $5.00 or 0.17162 shares of ChoiceOne common stock, in each case subject to ChoiceOne stock consisting of not more than 75% and not less than 50% of the aggregate merger consideration and other adjustments as set forth in the merger agreement.
Based on a closing price of $31.54 per share of ChoiceOne common stock on January 3, 2020, the implied per share value to Community Shores shareholders approximates $5.31 per share if 75% stock is elected (an aggregate transaction value of $21.9 million) and $5.21 per share if 50% stock is elected (an aggregate transaction value of $21.5 million). The transaction is projected to generate approximately 7% to 10% earnings per share accretion when fully phased in and tangible book value dilution is expected to be earned back in approximately 2.5 to 3 years.
In connection with the merger agreement, ChoiceOne entered into voting agreements with the directors of Community Shores and certain other shareholders, each in their capacities as shareholders of Community Shores. Each director and shareholder who is party to a voting agreement has agreed to vote in favor of the approval of the merger agreement, subject to the exceptions set forth in the voting agreements.
“When two successful, like-minded community banks come together to serve the families and businesses in Michigan, we are on our way to becoming the best bank in Michigan,” said Chairman of ChoiceOne Paul Johnson. “These two organizations are very similar in their steady growth and commitment to community banking. Our combined organization will allow us to expand our collective expertise into the communities we serve with enhanced capacity to invest further into technology, products and services as well as the continuation of our strong belief in providing local support.”
“We are extremely pleased to join forces with ChoiceOne as we lay the foundation for Michigan’s best community banking franchise,” said Chairman of Community Shores Bank Corporation, Gary Bogner. “When we considered this merger, the existence of similar cultures and comparable community banking philosophies were extremely important to us. This partnership definitely strengthens both of our organizations and presents a tremendous amount of new growth opportunities.”
In connection with this transaction, ProBank Austin is serving as financial advisor and Dickinson Wright PLLC is serving as legal counsel to Community Shores Bank Corporation. Donnelly Penman and Partners is serving as financial advisor and Warner Norcross + Judd LLP is serving as legal counsel to ChoiceOne Financial Services, Inc.
About ChoiceOne
ChoiceOne Financial Services, Inc. is a financial holding company headquartered in Sparta, Michigan and the parent corporation of ChoiceOne Bank and Lakestone Bank & Trust. Member FDIC. Lakestone Bank & Trust operates 15 offices in parts of Lapeer, Macomb and St. Clair counties. ChoiceOne Bank operates 14 offices in parts of Kent, Ottawa, Muskegon, and Newaygo counties. ChoiceOne Bank offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies, Inc. ChoiceOne Financial Services, Inc. common stock is quoted on the OTC under the symbol “COFS.” For more information, please visit Investor Relations at ChoiceOne’s website at choiceone.com.
Community Shores Bank Corporation
Community Shores Bank Corporation is the bank holding company of Community Shores Bank, the only independent community bank with headquarters in Muskegon, Michigan. The bank serves businesses and consumers in the western Michigan counties of Muskegon and Ottawa from four branch offices.
