Raising the number of authorized shares by 25 percent gives ChoiceOne Financial Services Inc. greater ability to pursue another acquisition should the opportunity arise.
Shareholders at the Sparta-based ChoiceOne Financial Services (Nasdaq: COFS), the holding company for ChoiceOne Bank, voted overwhelmingly at their recent annual meeting to raise the corporation’s number of authorized shares of common stock from 12 million to 15 million.
ChoiceOne directors proposed and recommended approval of the share increase. The corporation’s 2021 proxy statement noted “it is advisable to have additional authorized shares of common stock available for future issuance to position ChoiceOne to be able to react quickly to strategic opportunities that may arise in the future.”
The corporation could issue the shares, if needed. The additional authorized shares also could go to pay possible future dividends, equity compensation and “other corporate purposes that might be considered,” according to the proxy.
Expanding Michigan presence
After two acquisitions in the last two years that tripled ChoiceOne’s size, the corporation remains open to potential future deals, CEO Kelly Potes said.
“We’re interested in expanding our presence within Michigan. With good-sized offices on both sides of the state and the desire to grow, that is an option for us,” Potes said. “The desire is for the bank to grow both organically and, if possible, make acquisitions within the state of Michigan.”
ChoiceOne, which dates back to 1898, wants to remain independent.
The corporation presently has more than 7.8 million shares of common stock outstanding, plus 72,907 shares reserved for issuance under various equity plans. That leaves ChoiceOne with more than 4.1 million authorized common shares available for future issuance.
The corporation a year ago bought the former Community Shores Bank Corp. in Muskegon in a $21.9 million cash-and-stock deal that closed July 1, 2020, and added four offices in the lakeshore market and $245 million in assets.
ChoiceOne at that time increased authorized shares of common stock from 7 million to 12 million. About 524,000 shares went to the transaction.
The Community Shores Bank acquisition followed the $89 million all-stock deal for County Bank Corp. in Lapeer, the parent company of Lakestone Bank & Trust, in October 2019. Billed as a “merger of equals” because of the banks’ similar size and culture, the acquisition brought ChoiceOne another $673 million in assets and 14 offices in Lapeer, Macomb and St. Clair counties.
ChoiceOne, with 34 offices in West and eastern Michigan, had $2.07 billion in assets at the end of the first quarter.
As COVID-19 restrictions ease and in-person meetings ramp back up, “there’s a little more chatter out there” about bank M&A, Potes said.
The CEO of Michigan City, Ind.-based Horizon Bancorp Inc., which is buying 14 offices that TCF Financial Corp. is divesting as part of its merger with Huntington Bancshares Inc., said in an analyst call that he sees interest in bank M&A increasing, especially with the potential for federal tax code changes.
“We all are hearing that discussions are taking place and the conversations are increasing,” Horizon Chairman and CEO Craig Dwight said. “There has definitely been a pickup in conversations between bank CEOs and bank chairmen, as well as investment bankers.”
One of the latest transactions in West Michigan was St. Joseph-based United Federal Credit Union’s acquisition of the former Edgewater Bank that closed in April.