Bank of Ann Arbor in Michigan is set to acquire First National Bank in an all-cash transaction valued at around $101.4m.

The holding companies of the two banks, Arbor Bancorp and FNBH Bancorp, respectively, have entered into a definitive agreement to execute the deal.

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As agreed, First National shareholders will receive $3.65 per share in cash for each share of FNBH Bancorp common stock.

First National Bank acquisition: Benefits

First National Bank is a community bank serving individuals and SMEs in Livingston County.

The deal will create a combined lender with nearly $2.2bn of total assets. It will employ more than 300 employees across 17 branches.

Arbor expects that the deal to be accretive to earnings per share in excess of 10%, based on modelling assumptions.

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Bank of Ann Arbor president and CEO Tim Marshall said: “By bringing together two high-performing and like-minded community banks that share a commitment to serving their local communities, we will continue to provide individuals and businesses with excellent service and a full range of financial services.”

First National president and CEO Ronald Long said: “The merging of these two established institutions allows us to provide a broader range of banking services to our client base, including Bank of Ann Arbor’s Trust and Investment Management Group, Technology Industry Group, and equipment leasing.”

The First National Bank acquisition is expected to close during the second quarter of this year. The closure is subject to regulatory approvals, shareholders’ nod and other customary closing conditions.

Established in 1996, Bank of Ann Arbor has total assets of $1.75bn. Previously, the bank integrated three other Michigan financial services organisations with its operations.