Banking & Finance and Real Estate

Independent Bank sells 21 branches to Chemical Bank

December 11, 2012
| By Pete Daly |
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Independent Bank sells 21 branches to Chemical Bank
Ionia-based Independent Bank operates branches across Michigan’s Lower Peninsula. Image via fb.com

Ionia-based Independent Bank Corp. (Nasdaq: IBCP) has closed on its sale of 21 branches to Chemical Bank in Midland.

The deal closed last week and includes six branches in the Battle Creek area and 15 others in northeast Michigan and resulted in the transfer of approximately $405 million in deposits to Chemical Bank in exchange for the payment of $11.5 million. The “deposit premium” represents 3 and 4 percent of “certain core deposits” and 1.5 percent on “certain ‘out of market’ deposits,” according to Independent Bank.

Chemical Bank also purchased, at a discount of 1.75 percent, certain loans totaling approximately $45 million, which were related to the sold branches. These amounts are subject to adjustment based on a final settlement that will occur prior to year’s end.

Independent Bank expects a net gain on the branch sale of approximately $5.4 million as well as an increase in Tier 1 capital of approximately $8 million. This gain is net of transaction costs and expenses, loss on the sale of loans, loss on the sale of fixed assets and existing allocated core deposit intangibles. The sale is also projected to increase Independent Bank’s Tier 1 capital ratio from 7.29 percent to 7.96 and its total risk-based capital ratio from 13.22 percent to 14.31.

Independent Bank will continue to operate approximately 70 branch locations throughout Michigan.

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