Fentura Financial — Merger or Acquisition (July 2024)
22 slides from Fentura Financial's merger presentation, Jul 25, 2024
Slide 1: Merger with Fentura Financial, Inc. Transaction Overview
MERGER WITH FENTURA FINANCIAL, INC. TRANSACTION OVERVIEW JULY 25, 2024
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the federal securities laws relating to the proposed merger with Fentura Financial, Inc. (“Fentura”) by ChoiceOne Financial Services, Inc. (“ChoiceOne” or “COFS”), the integration of Fentura with
Slide 3: Important Information for Investors and Security Holders
3 IMPORTANT INFORMATION FOR INVESTORS AND SECURITY HOLDERS This communication is being made in respect of the proposed merger transaction involving ChoiceOne and Fentura. This material is not a solicitation of any vote or approval of the ChoiceOne or Fentura shareholders and is not a substitute for
Slide 4: Our vision is to be the best bank in Michigan
4 Our vision is to be the best bank in Michigan. Our mission is to provide superior service, quality advice, and show utmost respect to everyone we meet.
Slide 5: Combined Franchise Overview
5 Source: S&P Capital IQ Pro; locations include branches and loan production offices Financials are projected at closing. For illustrative purposes, assumes transaction closes on January 1, 2025 Projections assume cost savings 75% phased-in, excludes one-time deal costs and includes the $30.0 millio
Slide 6: Deposit market share rankings
6 Rank Institution (State) Locations Deposits in Market ($000) Market Share (%) 1 JPMorgan Chase & Co. (NY) 177 68,496,222 23.38 2 Huntington Bancshares Inc. (OH) 303 36,512,646 12.46 3 Comerica Inc. (TX) 161 33,117,138 11.30 4 Bank of America Corporation (NC) 76 30,838,488 10.53 5 The PNC Finl Svcs
Slide 7: A Combination of Two 125+ Year Financial Institutions
7 Source: S&P Capital IQ Pro A COMBINATION OF TWO 125+ YEAR FINANCIAL INSTITUTIONS 2006 Acquisition of Valley Ridge Financial Corporation 1987 - 1988 Name changes to The State Bank & Fentura Financial, Inc. is formed 2019 Acquisition of County Bank Corp 2016 Acquisition of Community State Bank 2019
Slide 8: A Combination of Two Similar Long Standing Community Banks
8 I. 125+ year franchise built over time in stable markets II. Attractive commercial loan portfolio boasting strong historical credit quality III. Culture of customer service and community commitment IV. Strong deposit franchise with attractive cost of funds V. Competitive technology
Slide 9: Financially Compelling Strategic Expansion
9 5-year median metrics between 2019 and 2023; see appendix for non-GAAP reconciliation Inclusive of the $30.0 million gross common stock offering announced simultaneously with the announcement of the proposed merger (excluding any exercise of the underwriter’s overallotment option to purchase addit
Slide 10: Capital Estimate
10 Capital Estimate Consolidated Bank-Level All Figures in % Terms Closing 2025E 2026E Closing 2025E 2026E TCE / TA 6.2 7.2 8.1 7.3 8.2 9.1 CET1 Ratio 9.5 10.8 11.9 11.0 12.2 13.3 Tier 1 Ratio 10.0 11.3 12.4 11.0 12.2 13.3 Total Capital Ratio 11.8 12.9 13.9 11.8 12.9 13.9 Leverage Ratio 7.6 8.6 9.4
Slide 11: Transaction Overview
11 1 Transaction multiples as of July 24, 2024 Note: Core figures remove net income attributable to realized gain/loss on securities, intangible amortization and nonrecurring items TRANSACTION OVERVIEW Transaction Structure Fentura Financial, Inc. to merge into ChoiceOne Financial Services, Inc.; fo
Slide 12: FETM: Strong Credit Profile and Comprehensive Due Diligence Process
12 Source: S&P Capital IQ Pro FETM: STRONG CREDIT PROFILE AND COMPREHENSIVE DUE DILIGENCE PROCESS F E T M N E T C H AR G E - O F F S / AV E R AG E L O AN S D U E D I L I G E N C E O V E RV I E W Discussions were collaborative and completed with the common goal of structuring a shareholder-oriented t
Slide 13: MRQ & Combined Deposit Composition
13 Transaction Accounts 52.3% MMDA + Savings 28.3% Retail Time (<$100K) 6.9% Jumbo Time (>$100K) 12.5% $2.1B Deposits Transaction Accounts 42.7% MMDA + Savings 34.5% Noninterest- bearing Deposits 24.3% Retail Time (<$100K) 9.4% Jumbo Time (>$100K) 13.3% Noninterest- bearing Deposits 28.3% $1.4B Depo
Slide 14: MRQ & Combined Loan Composition
14 1-4 Family 14.3% MultiFamily & CRE 55.9% Consumer 8.5% Commercial 18.7% Other 2.5% $1.4B Loans 1-4 Family 28.7% MultiFamily & CRE 59.2% Consumer 3.9% Commercial 8.2% $1.5B Loans 1-4 Family 21.5% MultiFamily & CRE 57.6% Consumer 6.2% Commercial 13.4% Other 1.3% $2.9B Loans Source: Based on interna
Slide 15: FETM: Commercial Real Estate Portfolio Details
15 Gov. Guarantee 16.5% Net Lease 16.3% Owner Occupied 14.9% Retail Strip 12.3% Special-Use 8.2% Office 7.2% Multi-Family 6.2% 1-4 Family 4.3% Self Storage 3.8% Medical Office 2.9% Industrial 2.7% Retail 2.0% Mixed Use 2.0% Land & Construction 0.8% $864.2 MM CRE Loans Source: Based on internal FETM
Slide 16: COFS: Profitability Driven by Strong Income Accretion
16 C O M PA R I S O N W I T H $ 1 B - $ 1 0 B M I D W E S T P E E R S 1 LT M C O R E R E T U R N O N AV E R A G E A S S E T S ( % ) 2 2.50 2.00 1.50 1.00 0.50 0.00 LT M C O R E R E T U R N O N AV E R A G E TA N G I B L E C O M M O N E Q U I T Y ( % ) 2 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Source
Slide 17: Earnings, Synergies & Cost Savings
17 Earnings, Synergies & Cost Savings Net income for COFS based on consensus analyst estimates Net income for FETM based on management estimates Cost savings of 28% of FETM’s noninterest expense base (75% realized in 2025, 100% thereafter) inclusive of 3% savings identified within COFS’ non-interest
Slide 18: Common Equity Offering Term Sheet
18 Issuer ChoiceOne Financial Services, Inc. (the “Company”) NASDAQ Symbol COFS Issuance Type Registered underwritten follow-on offering of shares of common stock, no par value per share, of the Company Base Offering Size $30.0 million or 1.2 million shares (excluding overallotment) Overallotment Op
Slide 19: COFS: Experienced Acquiror
19 $0.6 $0.7 $0.7 $1.7 $2.4 $2.4 $2.6 $2.6 $0.7 $1.8 $0.6 $0.7 $1.4 $1.9 $0.2 $2.4 $2.4 $2.6 $4.4 2017 2018 2019 2020 2021 2022 2023 Q2'24 COFS Assets ($B) Acquired Assets ($B) Source: S&P Capital IQ Pro 1 Assumes combined assets for COFS and FETM as of June 30, 2024 COFS: EXPERIENCED ACQUIROR TO TA
Slide 20: A Winning Combination
20 A Strong Presence in Great Markets Expanded Growth Opportunities for Both Banks’ Employees Strong Projected Profitability A Deeper Management Team A WINNING COMBINATION Excellent Asset Quality Greater Shareholder Liquidity An Enhanced Ability to Serve Customers and Compete
Slide 21: Non-GAAP reconciliation: tangible common equity
21 $101,444 $115,868 $124,455 $126,087 $138,702 $143,301 3,219 3,219 8,853 8,853 8,853 8,853 902 541 1,266 836 533 444 97,323 112,108 114,336 116,398 129,316 134,004 1,034,759 1,251,446 1,417,785 1,688,863 1,738,952 1,756,629 3,219 3,219 8,853 8,853 8,853 8,853 902 541 1,266 836 533 444 1,030,638 1,
Slide 22: Non-GAAP reconciliation: return on average tangible common equity
22 $11,578 $15,464 $16,579 $14,933 $14,629 $12,329 356 285 213 340 239 190 11,934 15,749 16,792 15,273 14,868 12,519 96,358 110,094 122,629 121,422 131,341 137,695 3,219 3,219 3,923 8,853 8,853 8,853 1,128 722 530 1,051 684 549 92,011 106,153 118,175 111,518 121,804 128,293 ($ in 000's, unless other
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