ChoiceOne Financial Services, Inc. Announces Pricing of Common Stock Offering

Rhea-AI Summary

ChoiceOne Financial Services, Inc. (NASDAQ: COFS) has announced the pricing of an underwritten public offering of 1,200,000 shares of its common stock at $25.00 per share, expecting to raise approximately $30.0 million in gross proceeds. The net proceeds, after deducting underwriting discounts, are estimated at $28.2 million. ChoiceOne has granted the underwriter a 30-day option to purchase up to an additional 180,000 shares. The offering is expected to close on or about July 26, 2024.

The company plans to use the net proceeds for general corporate purposes, including supplementing regulatory capital ratios and in conjunction with its announced merger with Fentura Financial, Inc. D.A. Davidson & Co. is acting as the sole book-running manager for the offering.

Positive

• Raising approximately $30.0 million in gross proceeds through public offering
• Net proceeds of $28.2 million to strengthen the company's financial position
• Potential for additional capital through 30-day over-allotment option
• Proceeds to be used for strengthening regulatory capital ratios
• Funds to support announced merger with Fentura Financial, Inc.

Negative

• Potential dilution of existing shareholders' ownership due to new share issuance
• Increased outstanding shares may impact earnings per share

Financial Analyst

ChoiceOne Financial Services' pricing of a $30 million common stock offering is a significant development with several implications for investors. The offering of 1,200,000 shares at $25.00 per share, with a potential over-allotment of 180,000 shares, indicates the company's strategy to bolster its capital position.

The net proceeds of approximately $28.2 million will be used for general corporate purposes, including enhancing regulatory capital ratios. This move is particularly noteworthy given ChoiceOne's announced merger with Fentura Financial, Inc. The capital raise suggests preparation for this merger, potentially to meet regulatory requirements or to fund the transaction.

Investors should consider the following points:

• The offering price of $25.00 per share and its relation to the current market price
• The 6% dilution effect on existing shareholders (potentially up to 9% if the over-allotment option is exercised)
• The impact on the company's capital structure and financial ratios
• The strategic implications of the capital raise in relation to the Fentura merger

While the offering strengthens ChoiceOne's financial position, it's important to monitor how effectively management deploys this capital, especially in the context of the upcoming merger and the challenging banking environment.

Banking Industry Expert

ChoiceOne's decision to raise capital through a public offering is a strategic move that warrants attention in the current banking landscape. As the 8th largest bank holding company in Michigan with assets of approximately $2.6 billion, this capital raise is significant for several reasons:

1. Regulatory Preparedness: The banking sector has faced increased scrutiny and regulatory pressure, especially for mid-sized banks. This capital infusion will help ChoiceOne maintain strong capital ratios, potentially exceeding regulatory requirements.

2. Merger Support: The announced merger with Fentura Financial indicates ChoiceOne's growth ambitions. The additional capital could facilitate a smoother integration process and provide financial flexibility during the merger.

3. Market Positioning: With 35 offices across various Michigan counties, ChoiceOne is solidifying its position in a competitive market. This capital could support expansion or technological investments to enhance its competitive edge.

4. Economic Uncertainty: Given the current economic climate, maintaining a strong capital buffer is prudent. This move may be seen as a preemptive measure to navigate potential economic headwinds.

Investors should closely monitor the execution of ChoiceOne's strategy post-capital raise, particularly how it balances growth initiatives with risk management in the evolving banking sector.

SPARTA, Mich., July 25, 2024 /PRNewswire/ -- ChoiceOne Financial Services, Inc. (NASDAQ: COFS) ("ChoiceOne"), the parent company of ChoiceOne Bank, announced today the pricing of an underwritten public offering of 1,200,000 shares of its common stock at a price to the public of $25.00 per share, for gross proceeds of approximately $30.0 million. The net proceeds to ChoiceOne, after deducting the underwriting discounts but before deducting the estimated offering expenses payable by ChoiceOne, are expected to be approximately $28.2 million. ChoiceOne has granted the underwriter a 30-day option to purchase up to an additional 180,000 shares of Company common stock to cover over-allotments at the public offering price, less the underwriting discount.

D.A. Davison & Co. is acting as sole book-running manager for the offering.

ChoiceOne intends to use the net proceeds of this offering for general corporate purposes including supplementing regulatory capital ratios and in conjunction with its announced merger with Fentura Financial, Inc.

ChoiceOne expects to close the offering, subject to customary conditions, on or about July 26, 2024.

Additional Information Regarding the Offering

A shelf registration statement, including a prospectus (File No. 333-272337), with respect to the offering was previously filed by ChoiceOne with the U.S. Securities and Exchange Commission (the "SEC") and was declared effective by the SEC on June 20, 2023. A preliminary prospectus supplement relating to and describing the terms of the offering was filed and is available on the SEC's website at www.sec.gov and ChoiceOne will file a final prospectus supplement relating and describing the terms of the offering. Before considering an investment, prospective investors should read the final prospectus supplement and the accompanying prospectus in the registration statement and other documents ChoiceOne has filed with the SEC for more complete information about ChoiceOne and the offering because they contain important information. Copies of these documents are available at no charge by visiting the SEC's website at www.sec.gov. When available, copies of the final prospectus supplement and the accompanying prospectus relating to these securities may be obtained free of charge by visiting the SEC's website at www.sec.gov, or may be obtained by contacting: D.A. Davidson & Co. by telephone at 1-800-322-5915 or by e-mail at prospectusrequest@dadco.com.

No Offer or Solicitation

This press release is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to sell or the solicitation of an offer to buy any securities. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offer of securities shall be made except by means of a prospectus meeting the requirement of Section 10 of the Securities Act of 1933, as amended (the "Securities Act").

About ChoiceOne
ChoiceOne Financial Services, Inc. is a financial holding company headquartered in Sparta, Michigan, and the parent corporation of ChoiceOne Bank. Member FDIC. ChoiceOne Bank operates 35 offices in parts of Kent, Ottawa, Muskegon, Newaygo, Lapeer, St. Clair, Macomb, and Oakland counties. ChoiceOne is an approximately $2.6 billion-asset bank holding company making it the eighth largest bank holding company in Michigan based on asset size. ChoiceOne Bank offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies, Inc. ChoiceOne Financial Services, Inc. common stock is quoted on the Nasdaq Capital Market under the symbol "COFS." For more information, please visit Investor Relations at ChoiceOne's website choiceone.bank.

Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the federal securities laws relating to the registered follow-on offering of common stock by ChoiceOne. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," "may," "could," "look forward," "continue," "future" and variations of such words and similar expressions are intended to identify such forward looking statements. These statements reflect current beliefs as to the expected outcomes of future events and are not guarantees of future performance. These statements involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements. Furthermore, ChoiceOne undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.

A discussion of certain risks and uncertainties affecting ChoiceOne, and some of the factors that could cause ChoiceOne's actual results to differ materially from those described in the forward-looking statements, can be found in the sections entitled "Risk Factors" and "Risks Related to the Company's Business" in ChoiceOne's Annual Report on Form 10-K for the year ended December 31, 2023 and other current and periodic reports, which have been, or will be, filed with the Securities and Exchange Commission (the "SEC") and are, or will be, available on the SEC's website (www.sec.gov).

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SOURCE ChoiceOne Financial Services, Inc.

FAQ

What is the price per share for ChoiceOne Financial Services' (COFS) public offering?

ChoiceOne Financial Services (COFS) has priced its public offering at $25.00 per share.

How many shares is ChoiceOne Financial Services (COFS) offering in its public offering?

ChoiceOne Financial Services (COFS) is offering 1,200,000 shares of its common stock in the public offering.

What are the expected gross proceeds from ChoiceOne Financial Services' (COFS) public offering?

ChoiceOne Financial Services (COFS) expects to raise approximately $30.0 million in gross proceeds from the public offering.

When is the expected closing date for ChoiceOne Financial Services' (COFS) public offering?

ChoiceOne Financial Services (COFS) expects to close the offering on or about July 26, 2024, subject to customary conditions.

How does ChoiceOne Financial Services (COFS) plan to use the proceeds from the public offering?

ChoiceOne Financial Services (COFS) intends to use the net proceeds for general corporate purposes, including supplementing regulatory capital ratios and supporting its announced merger with Fentura Financial, Inc.