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Keweenaw Financial to acquire Michigan-based North Star Financial in $42M deal

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Keweenaw Financial to acquire Michigan-based North Star Financial in $42M deal

Hancock, Mich.-based Keweenaw Financial Corp. agreed to acquire Bingham Farms, Mich.-based North Star Financial Holdings Inc. and its unit Main Street Bank in an all-cash deal valued at $42 million.

The combined company will have more than $800 million in assets, 11 branches and four loan origination offices in Michigan's Upper Peninsula and in southeast Michigan. The transaction is expected to close in the first quarter of 2020, and the joint entity will be governed by Keweenaw Financial unit Superior National Bank & Trust Co.'s board.

Keweenaw Financial had total assets of $564.7 million and North Star Financial had total assets of $283.5 million, both as of June 30, according to S&P Global Market Intelligence data.

S&P Global Market Intelligence calculates the deal value is 176.2% of common equity and 177.6% of tangible common equity and 21.2x earnings, on an aggregate basis. The deal value is 14.82% of assets, 17.50% of deposits, and the tangible book premium to core deposits ratio is 14.73%.

S&P Global Market Intelligence valuations for bank and thrift targets in the Midwest region between Sep. 18, 2018, and Sep. 18, 2019, averaged 145.83% of book and 148.74% of tangible book and had a median of 16.37x last-12-months earnings, on an aggregate basis.

Keweenaw Financial will enter Oakland County, Mich., with two branches to be ranked No. 14 with a 0.40% share of approximately $60.73 billion in total market deposits.

Charter Capital Partners, Olejniczak Advisors, John Hecht Consulting and Warner Norcross and Judd LLP served as Superior National Bank & Trust's advisers in the deal. ProBank Austin provided fairness opinion on the deal. McQueen Financial Advisors, Kus Ryan & Associates PLLC and Seyburn Kahn PC are the advisers for Main Street Bank.

To use S&P Global Market Intelligence's branch analytics tools to compare market overlap, click here. To create custom maps, click here.

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