Standard Federal Bancorp. said its $27.15 million agreement to acquire FSB Financial Corp. will bolster its presence in the hotly contested Kalamazoo, Mich., market.
The all-cash deal, which was announced Friday, will bring $13 billion- asset Standard Federal four branches. But the Troy, Mich.-based bank plans to close two FSB branches and one of its own, leaving it with a dozen offices in Kalamazoo.
Once the deal is complete, Standard Federal will have $525 million of deposits in the Kalamazoo area.
That would put it second to First of America Bank Corp., the leader in its home city with about $750 million of deposits, and ahead of Old Kent Financial Corp. Old Kent has about $500 million of deposits there.
"If we had a choice between us having those deposits or one of our competitors having them, obviously, we'd rather have them," Thomas H. Ricketts, Standard Federal's chairman, president, and chief executive, said in an interview Friday. "Any time you can enhance your franchise in a community, it's worth it."
Standard Federal, the holding company for Standard Federal Bank, said it would pay $23.50 per share for FSB Financial, which has $170.4 million of assets.
FSB Financial executives said they had begun strategic planning recently and soon realized they had few options outside of a merger or acquisition.
"Kalamazoo is a very competitive market. It was apparent to us ... that it would be very difficult for us to grow and remain an independent organization," said Doran Stanley, FSB's executive vice president. "This is good both for our depositors and shareholders."
Mr. Stanley and Phyllis Barents, an FSB senior vice president, will not stay on after the purchase. David L. Hatfield, FSB's chairman, president, and chief executive, will become a vice president at Standard Federal, said Mr. Ricketts.
Other FSB employees are likely to lose their jobs with the consolidation of some back-office operations, but Mr. Ricketts said he was unsure yet how many. Some FSB employees were being offered jobs in Troy.
The acquisition will be immediately accretive to Standard Federal's earnings.