IONIA, Mich., May 23, 2012 /PRNewswire/ -- Independent Bank Corporation (NASDAQ: IBCP) today announced that its subsidiary bank, Independent Bank, has signed a definitive agreement to sell 21 of its branches to Chemical Bank, headquartered in Midland, Michigan. The branches to be sold include 6 branch locations in the Battle Creek market area and 15 branch locations in Northeast Michigan.
It is expected that the transaction will result in the transfer of approximately $420 million of deposits to Chemical Bank in exchange for the payment of a deposit premium of approximately $12.4 million. This represents a deposit premium of approximately 3.1% on identified core deposits. Certain non-core deposits will be transferred at no premium. Chemical Bank will also have the right to purchase certain loans originated at the branches being sold, at a discount of 1.75%. The sale is expected to be completed by the end of the third quarter of 2012, subject to customary regulatory approvals and the satisfaction of other customary terms and conditions of sale.
"This branch sale allows us to significantly advance the final phase of our capital plan and achieve our targeted bank regulatory capital ratios without the dilution of a common stock offering. Further, by avoiding a large common stock issuance, we are able to protect our deferred tax asset. While exiting any market is difficult, we believe our remaining markets from West Michigan to Lansing, the Bay region and Southeast Michigan provide for significant growth in the future as well as the upside from the credit improvement we have been recently experiencing," said Brad Kessel, President of Independent Bank. "The Board and management are thankful to the loyal customers and dedicated employees in the markets being divested," Kessel concluded.
The sale of the branches is projected to increase Independent Bank's Tier 1 capital ratio from 6.84% to 8.81% and its total risk-based capital ratio from 11.81% to 12.85%, based on March 31, 2012 financial data.
The deposits being transferred represent approximately 19% of the Bank's total deposits as of March 31, 2012. Following the transaction, the Bank will continue to operate 80 branch locations throughout Michigan.
Stifel Nicolaus Weisel acted as financial advisor to Independent Bank Corporation and Varnum LLP served as legal advisor.
About Independent Bank Corporation
Independent Bank Corporation (Nasdaq Symbol: IBCP) is a Michigan-based bank holding company with total assets of approximately $2.4 billion. Founded as First National Bank of Ionia in 1864, Independent Bank Corporation currently operates over 100 offices across Michigan's Lower Peninsula through one state-chartered bank subsidiary. This subsidiary (Independent Bank) provides a full range of financial services, including commercial banking, mortgage lending, investments and title services. Independent Bank Corporation is committed to providing exceptional personal service and value to its customers, stockholders and the communities it serves.
For more information, please visit our Web site at: www.IndependentBank.com.
Any statements in this news release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Words such as "expect," "believe," "intend," "estimate," "project," "may" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are predicated on management's beliefs and assumptions based on information known to Independent Bank Corporation's management as of the date of this news release and do not purport to speak as of any other date. Forward-looking statements may include descriptions of plans and objectives of Independent Bank Corporation's management for future operations, products or services, and forecasts of the Company's revenue, earnings or other measures of economic performance, including statements of profitability, estimates of credit quality trends, and statements about the potential value of our deferred tax assets. Such statements reflect the view of Independent Bank Corporation's management as of this date with respect to future events and are not guarantees of future performance. These forward-looking statements involve assumptions and are subject to substantial risks and uncertainties, such as changes in Independent Bank Corporation's plans, objectives, expectations and intentions. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, the Company's actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include the ability of Independent Bank Corporation to meet the objectives of its capital restoration plan, the ability of Independent Bank to remain well-capitalized under federal regulatory standards, the pace of economic recovery within Michigan and beyond, our ability to collect receivables from Mepco Finance Corporation's counterparties related to cancellations of payment plans, changes in interest rates, changes in the accounting treatment of any particular item, the results of regulatory examinations, changes in industries where the Company has a concentration of loans, changes in the level of fee income, changes in general economic conditions and related credit and market conditions, and the impact of regulatory responses to any of the foregoing. Forward-looking statements speak only as of the date they are made. Independent Bank Corporation does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. For any forward-looking statements made in this news release or in any documents, Independent Bank Corporation claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
SOURCE Independent Bank Corporation