SOURCE: Sturgis Bancorp Inc.

November 12, 2014 19:00 ET

Sturgis Bancorp, Inc. Announces Agreement to Acquire West Michigan Savings Bank

STURGIS, MI--(Marketwired - Nov 12, 2014) - Sturgis Bancorp, Inc. (OTCQB: STBI), the parent company of Sturgis Bank & Trust Company, announced the signing of a definitive agreement to acquire West Michigan Savings Bank. 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.

About Sturgis Bancorp, Inc.
Sturgis Bancorp, Inc. is the holding company for Sturgis Bank & Trust Company and its subsidiaries, Oakleaf Financial Services, Inc. and Oak Mortgage, LLC. Sturgis Bancorp, Inc. provides a full array of trust, commercial and consumer banking services from 11 banking centers in Sturgis, Bronson, Centreville, Climax, Colon, South Haven, Three Rivers and White Pigeon, Michigan. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all of the markets served by Sturgis Bank & Trust Company. More information about Sturgis Bank & Trust Company may be obtained at www.sturgisbank.com.

About West Michigan Savings Bank
West Michigan Savings Bank is an independent community bank headquartered and operating one office in Bangor, Michigan. West Michigan Savings Bank, organized in 1882, offers commercial banking services to both business and individual customers. More information about West Michigan Savings Bank may be obtained at www.wmsbank.com.

Forward-Looking Statements
This press release includes certain forward-looking statements about Sturgis Bancorp, Inc., Sturgis Bank & Trust Company, West Michigan Savings Bank and the proposed transaction. In particular, statements regarding the parties' expectations about future financial performance, the realization of the expected benefits of the acquisition transaction, expected earnings accretion, the expected tangible book value dilution earn-back period and the expected date of completion of the transaction are forward-looking and are subject to a number of risks, uncertainties and assumptions, which are difficult to predict with regard to timing, extent, likelihood and degree of occurrence and are beyond the control of Sturgis Bancorp, Inc., Sturgis Bank & Trust Company or West Michigan Savings Bank. Therefore actual results and outcomes could differ materially from what may be expressed or forecasted in such forward-looking statements. The parties to the transaction undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Such risks and uncertainties include, but are not limited to: the risk that the parties will not obtain the regulatory or West Michigan Savings Bank shareholder approvals needed for the transaction or that such approvals may be delayed; the possibility that cost savings expected to be realized in the transaction may not be realized within expected time frames or at all; the possibility that integrating West Michigan Savings Bank's banking business into Sturgis Bank & Trust Company's banking business could cost more, take longer, or be less successful than expected or have unanticipated adverse results relating to the parties' existing businesses; the impact of the completion of the transaction on Sturgis Bancorp, Inc.'s financial statements will be affected by the timing of the transaction; Sturgis Bank & Trust Company may incur more credit losses from West Michigan Savings Bank's loan portfolio than expected and deposit attrition may be greater than expected; continued unfavorable economic conditions generally and, more particularly, in Michigan, including high unemployment, could result in loan losses that would adversely affect operating results; the monetary policies of the Board of Governors of the Federal Reserve System, which affect interest rates, as well as competitive pressures among depository institutions, could cause net interest margins to decline, thereby adversely affecting banking revenues; and legislative or regulatory requirements or changes, including regulations that are in the process of being adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act, could increase the costs of doing business.

If any of these risks or uncertainties materializes or any of the assumptions underlying the forward-looking statements proves to have been incorrect, the parties' financial performance could differ materially from the financial performance expressed in, or implied or projected by, the forward-looking statements. Accordingly, you should not place undue reliance on forward-looking statements contained in this press release.

No Solicitation
This press release is not a solicitation of a proxy or a vote of approval from any shareholder of West Michigan Savings Bank. In connection with the proposed transaction, West Michigan Savings Bank will be preparing a proxy statement concerning the proposed transaction. That proxy statement will be sent to the shareholders of West Michigan Savings Bank, who are urged to carefully read the proxy statement and any other relevant documents when they become available, because they will contain important information about West Michigan Savings Bank and the proposed transaction.

Contact Information

  • For Further Information:
    Eric Eishen
    Chief Executive Officer

    Brian Hoggatt
    Chief Financial Officer
    269-651-9345