MARQUETTE - The Mackinac Financial Corporation, the holding company for mBank, announced Friday it has reached a definitive agreement with Peninsula Financial Corporation to acquire Peninsula Bank this year.
"We are extremely pleased and excited to be able to partner with a long standing community-focused institution like Peninsula Bank," said Kelly W. George, mBank president and CEO, in a written statement. "mBank is a 'well capitalized,' safe and sound community bank, and we believe the customer-centric cultures and community bank oriented traditions of our two organizations are very complementary...
"As we move through to the closing of the transaction ... we will work transparently in making the transaction as smooth as possible."
He encouraged anyone with questions to stop into a local branch to speak with a banker.
The agreement calls for a cash and stock transaction for a fixed $13.285 million purchase of $10.5 million of equity, according to a press release. Shareholders of Peninsula will also receive a special dividend immediately prior to close of any equity greater than $10.5 million as specified in the merger agreement.
The transaction will increase mBank's asset position as the largest bank headquartered in the Upper Peninsula with post-transaction assets estimated at about $710 million and gross balance sheet loans of roughly $561 million. With the inclusion of the secondary market service retained sold loans of $260 million, total loans under management will be approximately $861 million. Combined core deposits are expected to total approximately $581 million. It is also anticipated, according to the press release, that mBank will rank as the 16th largest financial institution headquartered in Michigan, out of 123 banks.
Peninsula Bank currently operates six full-service banking centers spanning from Marquette to Ishpeming, with nearly $132 million in total assets and $112 million in deposits. The acquisition will nearly double mBank's U.P. presence to 13 total branches, increasing its overall number of Michigan branches from 11 to 17.
"Given mBank's presence and commitment to our Upper Peninsula communities, businesses and residents, they are an excellent fit for our organization and customer base," Peninsula Board Chairman John Jilbert said in a written statement. "We believe our similar business philosophies will result in the preeminent bank in the U.P. The Peninsula Board and Management Team also believe the partnership with mBank will deliver significant value for current Peninsula shareholders and give them the opportunity to realize additional value in the future as shareholders of Mackinac Financial Corporation."
Under the terms of the merger agreement, shareholders of Peninsula will receive a mix of shares of Mackinac common stock and cash for each share of Peninsula common stock, with the mix depending on cash/stock elections made by each Peninsula shareholder, provided that the aggregate cash consideration will not exceed 35 percent of the total merger consideration.
The Mackinac Financial Corporation estimates operating savings resulting from economies of scale and increased efficiencies projected to be roughly 35 percent and are expected to be fully realized in the 2015 fiscal year.
The transaction is expected to close in the late third quarter or early fourth quarter of this year.
Jackie Stark can be reached at 906-228-2500, ext. 242.