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Two Michigan community banks — Level One Bancorp and Ann Arbor Bancorp — announced a $67.8-million merger agreement. 

Under the terms of the deal, shareholders of Ann Arbor Bancorp will receive $38.50 a share in cash. Ann Arbor Bancorp is the privately held parent of Ann Arbor State Bank. 

Ann Arbor State Bank has three branches, two offices in Washtenaw County and an office in Jackson County. Ann Arbor Bancorp was established in January 2009. 

As of June 30, Ann Arbor State Bank reported $321 million in assets, $230 million in loans and $262 million in deposits.

Patrick Fehring, president and Chief Executive Officer of Level One Bank, said the deal allows Level One to “productively deploy the capital we raised during our 2018 initial public offering.”

“We are pleased to welcome the customers and team members of Ann Arbor State Bank to the Level One family,” Fehring said.

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He noted that the merger allows Level One, which was founded in 2007, an opportunity to accelerate its expansion in the “very attractive Ann Arbor market.” 

The combined company will have more $1.8 billion in assets, $1.4 billion in loans and $1.5 billion in deposits based upon financials as of June 30. Level One Bank has 12 locations mainly in metro Detroit, plus its Farmington Hills headquarters,

Level One, which prides itself on being an entrepreneurial bank, said the cultural fit is excellent between the banks. Level One executives noted that Ann Arbor is home to the University of Michigan, which has a strong relationship with entrepreneurs, as well. 

Level One Bancorp closed at $23.60 a share Tuesday, up 40 cents or 1.72%. 

Peter Schork, the co-founder and president and CEO of Ann Arbor State Bank, will join Level One following completion of the merger.

The transaction is expected to close late this year or early next year. Regulators and shareholders of Ann Arbor Bancorp must approve the deal.

Contact Susan Tompor:313-222-8876 or stompor@freepress.com. Follow her on Twitter @tompor. Read more on business and sign up for our business newsletter.

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