Banking & Finance, Real Estate, and Retail

Sparta’s ChoiceOne Bank doubling in size

Financial institution gains new abilities in merger with bank and trust on state’s east side.

March 29, 2019
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ChoiceOne Bank Sparta
ChoiceOne’s merger with County Bank Corp. won’t diminish its service to the agricultural industry that is so prevalent around Sparta, officials said. Courtesy ChoiceOne Bank

ChoiceOne CEO Kelly Potes said the two main benefits customers will get from a merger with County Bank Corp. are bigger loan sizes and the addition of trust services.

Sparta-based holding company ChoiceOne Financial Services said last week that it signed a definitive merger agreement with Lapeer-based County. The two parties will combine into one entity under the name ChoiceOne Financial Services, which will be based in Sparta.

The deal is expected to close in the second half of 2019, subject to regulatory and shareholder approvals.

ChoiceOne Bank and Lakestone Bank & Trust, the parents’ subsidiaries, are expected to consolidate in the second quarter of 2020. A name for the new bank has not been determined, Potes said.

The merger will combine ChoiceOne’s $670 million in assets and County’s $617 million in assets to create a bank holding company with about $1.3 billion in assets and 28 offices in West and southeastern Michigan.

Paul Johnson, board chair, and Bruce Cady, vice chair, will continue to work out of Lapeer. Potes and Michael Burke, president, will work from Sparta.

Potes said the merger gives both sides the best of both worlds, as the banks are “almost carbon copies” of each other when it comes to values, culture and financial performance, yet they have no overlap in geographical footprint and serve some different industries.

“I think it will be very positive because … it will leverage our combined size for added technology and vendors … (and) it will also allow us to continue to grow with our clients,” Potes said.

“We may be able to do larger-size loans now that we’re going to be roughly double the size of where we were. … We bank the whole community, so it’s not like our minimum will change or anything like that. We’ll do loans of any size; there’s nothing too small.”

He said although ChoiceOne has an investment center offering estate planning; retirement planning; charitable giving; asset preservation; college planning; stocks, bonds and mutual funds; and risk and tax management services, it does not currently offer trust services, but Lakestone does.

“We’ll be able to offer trust services in the Grand Rapids area or in our current marketplace. That will be a big addition for us,” he said.

ChoiceOne, being based in a rural area, serves the agriculture industry and “underbanked” migrant workers with Spanish-language services, and that won’t change, he said.

Nor will its emphasis on fintech partnerships and services — although the two entities have not hashed out the details of what banking platforms, websites and apps it will use after the merger.

ChoiceOne in August 2018 was selected as one of the nation’s “Most Innovative Community Banks” from research conducted by the Independent Community Bankers of America (ICBA), mostly due to “healthy relationships” with Detroit-based Autobooks — developer of the integrated payments and accounting platform ChoiceOne offers its small-business customers — and HT Mobile Apps, developer of mobile savings and rewards tool Plinqit that interfaces with ChoiceOne checking accounts.

In February, the bank rolled out voice bill pay through Amazon Alexa.

Potes said ChoiceOne will be able to lend its expertise on the ag industry and fintech to Lakestone as needed, and in turn, it will benefit from Lakestone’s strengths in lending to the medical industry.

Both banks do “about the same amount” of donations of time, talent and money in the communities they serve, he said, and the doubling of assets will allow them to increase that giving back.

The entities have a pro forma combined loan portfolio of $794,409. It consists of 28.8 percent family loans, 18.7 percent commercial and industrial, 17.4 percent owner-occupied commercial real estate (CRE), 10.2 percent other CRE, 5.4 percent construction, 5 percent other, 4.4 percent consumer, 4.2 percent farm, 3.2 percent multifamily and 2.7 percent agriculture.

ChoiceOne and County’s combined total deposits are about $1.12 million.

According to an analysis of the top 15 publicly traded banks in Michigan based on assets, ChoiceOne pro forma is No. 10, with about $1.28 million in total assets and market capitalization of $178.4 million.

Lakestone has served southeast Michigan since 1902 and exists in its current form as the result of a 2016 merger between CSB Bank and Lapeer County Bank. It has more than 150 employees across its footprint of Lapeer, St. Clair and Macomb counties.

ChoiceOne was founded in 1898 and in 2006 merged with Valley Ridge Bank. It has more than 700 shareholders and over 160 employees in Kent, Ottawa, Muskegon and Newaygo counties.

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