Chemical To Acquire Bank West
GRAND RAPIDS — Chemical Financial Corp. announced Tuesday its intention to merge Bank West Financial Corporation into its corporate fold in a transaction valued at $29.8 million.
Bank West Financial is the Grand Rapids-based holding company for Bank West, a community bank with five branch offices in Kent and Ottawa counties.
As of March 31, Bank West had $279 million in total assets, $179 million in total deposits and $225 million in total loans. It was originally established in 1887 as a savings and loan institution.
The deal would give Bank West shareholders $11.50 cash for each share of Bank West’s common stock. On the day the acquisition was announced, Bank West shares were trading at $9.50.
Ronald Van Houten, president and CEO of Bank West, said he’s already received more than a half dozen calls of congratulations from shareholders.
“They seem to be happy,” Van Houten said. “I’ve heard nothing negative coming from shareholders as we speak today.”
Chemical Financial’s four subsidiary banks operate 118 offices and two loan production offices in 30 counties in Michigan’s Lower Peninsula.
Last month Chemical Financial extended its footprint to the Lakeshore with the purchase of three former Old Kent Bank and Fifth Third Bancorp branches in Holland, Zeeland and Grand Haven in Ottawa County, and one branch in Fremont.
The Ottawa County branches will become part of the company’s Chemical Bank West subsidiary currently headquartered in Cadillac.
That acquisition followed on the heels of Chemical’s January purchase of Shoreline Financial Corp., a Benton Harbor-based one-bank holding company. Shoreline operated 30 branch offices and two loan production offices in southwest Michigan.
At the time of the transaction, Shoreline had total assets of $1.1 billion, and the company’s total deposits and total loans both stood at $800,000.
Chemical Financial Corp. was organized as a bank holding company in 1973. It’s the offspring of Chemical Bank and Trust Company, which was founded in Midland in 1917.
Chemical Financial currently ranks as the fifth largest community bank in Michigan, with assets of $3.1 billion and deposits totaling $2.4 billion. The company reported net income of $29 million last year.
The Shoreline Financial and Bank West acquisitions combined will bump Chemical to the rank of fourth largest in the state, said Aloysius Oliver, Chemical’s president and CEO.
Chemical doesn’t have any offices outside of Michigan and expects to keep it that way, said Alan Ott, chairman of the board. He added that there are plenty of opportunities in Michigan, and Chemical plans on taking advantage of those when possible.
Oliver said the proposed acquisition of Bank West is “a logical extension of Chemical’s markets” and will close the gap between Chemical Bank West and Chemical Bank Shoreline.
Van Houten said the proposed merger will provide Bank West customers with a broader variety of banking products and services. He said the delivery of trust, investment and Internet banking services, all of which were in the pipeline, will come on line sooner for Bank West customers as a result of the merger.
The companies still have to file a definitive agreement, and the merger remains subject to approval by both Bank West shareholders and federal banking regulators. The deal is expected to close in the fourth quarter of this year.
According to Oliver, the Shoreline acquisition presented an opportunity for Chemical to establish a presence in western Michigan. When the Old Kent/Fifth Third branches became available, they simply represented “one more step” into the West Michigan market.
As to the newly proposed Bank West acquisition, Oliver said it was the business climate and “the size of the Grand Rapids market and the nucleus here” that led the company westerly to Bank West.
“Grand Rapids is a fast-paced market and if we want to be a statewide bank this is an area where we want to be. This is a great opportunity to expand our franchise,” Oliver said. “Our plans going forward are to operate in Michigan with three subsidiary banks when we get this all sorted out.”
The bank and trust headquarters in Midland will service the east side of the state. Chemical Bank West, currently headquartered in Cadillac, will serve the west side of the state and may be relocated to Grand Rapids simply because of the size of the market here, Oliver added. Chemical Bank Shoreline will operate in the southwestern corner of the state.
Chemical Bank West has about $450 million in assets. With the addition of Bank West’s $280 million in assets, if Grand Rapids turns out to be the head office for Chemical Bank West, it will have $730 million in assets, Oliver pointed out.
Ott said Chemical has yet to announce who will head up the Grand Rapids operation, but he said Van Houten will likely serve as chairman of Chemical Bank West.
Van Houten noted that Bank West wasn’t looking aggressively for a buyer, but when Chemical Financial came forward, “we found the synergy was there with the community concept and the spirit we could maintain as a local West Michigan community bank.”
All local managers will stay in place to manage the branches, Oliver said, adding that the merger gives employees more opportunities for advancement.
Ott said the company doesn’t anticipate any job losses as a result of the merger. Rather, there’s hope for some job gains.
Bank West’s board of directors will be folded into the Chemical group as a community bank board, which also will serve as board of directors for Chemical Bank West, Ott said. Two community bank board members will be seated as directors on the main board in Midland.
Why come to Grand Rapids and why now? Van Houten said with Bank West’s presence in Belding, Lakeview and Greenville, the company was already established on the fringes of Grand Rapids.
“With Old Kent being the size that it was, you couldn’t come into Grand Rapids without some size. Once we got into Benton Harbor, that opened up our strategic plan to move more toward western Michigan,” he explained.
Ott added that Bank West’s established name and its “geography” was highly attractive to Chemical.
“You have to have size in order to penetrate the market with four branches,” Ott said. “We couldn’t come to Grand Rapids and didn’t before because the Chemical name recognition here wouldn’t have been that great.
“We’ve never brought in a bank that didn’t have something that it could do better than we could do. There are some things that we can do better. Hopefully, you take the best of both.”
Van Houten emphasized that Chemical Financial and Bank West officials informed their employees in advance of the move out of respect for them and, in part, to avoid the type of donnybrook that followed the surprise announcement of Fifth Third’s acquisition of Old Kent.
“One of the things we told our employees was that there could be some system changes,” Ott added. “There’s never a merger or acquisition without some changes. The changes will be minimal and I don’t think they’ll affect employees. We have enough branches along here now that there’s no reason an employee of Bank West couldn’t work for Chemical Shoreline or vice versa.”