Independent Bank President Brad Kessel said the branch sale allows the bank to significantly advance the final phase of its capital plan and achieve targeted bank regulatory capital ratios without the dilution of a common stock offering.
As part of the transaction, to be completed by the end of the third quarter of 2012, $420m of deposits, representing 19% of IBCP’s total deposits, is expected to be transferred to Chemical Bank in exchange for the payment of a deposit premium of approximately $12.4m.
The transaction represents a deposit premium of 3.1% on identified core deposits while transfer of certain non-core deposits will be carried out at no premium.
Chemical Bank can purchase certain loans originated at the branches being sold, at a discount of 1.75%.
Based on 31 March 2012 financial data, the sale, subject to customary regulatory approvals, 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%.
Upon completion of the transaction, the Bank will continue to operate 80 branch locations throughout Michigan.
Stifel Nicolaus Weisel and Varnum served as financial advisor and legal advisor to Independent Bank respectively.
