The banking offices include five located in Bowling Green and Franklin, Kentucky and single offices located in Paoli, Mitchell and Bedford, Indiana. In addition, First Security has agreed to acquire a pool of indirect consumer, commercial, and commercial real estate loans from Integra.
First Security will assume approximately $188.2m of deposit liabilities related to the eight branches and acquire $74.8m of branch related loans, as well as $38.4m of additional commercial real estate, $2m of other commercial and $56.9m of indirect consumer loans selected by First Security originated from other Integra offices. The Kentucky branches include approximately $122.4m of deposits, while the Indiana branches include approximately $65.8m of deposits.
Integra expects this transaction to improve its tier 1 and total risk based capital ratios by approximately 120 basis points, while increasing its tier 1 leverage ratio by approximately 75 basis points. The transactions are also expected to increase the parent company’s tangible common equity to tangible assets ratio by approximately 55 basis points.
After completion of this transaction, First Security will have 11 banking centers in Kentucky and Indiana. First Security’s acquisition of these branches will result in total assets of approximately $430m and deposits of approximately $340m.
Michael Alley, chairman and CEO of Integra Bank, said: “This is the third sale of branch clusters we have announced in 2010 and we continue to expect additional announcements in the next 90 days. The deposit premiums and reduction of risk weighted assets generated from these divestitures improve our capital position and are a primary component of our multi-step strategy that will result in a focus on community banking in a narrower operating footprint.
“The capital generated from these sales will allow us to evaluate sales of both non-performing and performing loans and will lead to aggressive reductions of our cost structure to match our core earning capacity, aggressive marketing of our services to community relationship customers, and a return to profitability.”
Lynn Cooper, CEO of First Security, said: “We look forward to continuing our expansion plans into two new markets. The Bowling Green, Franklin, Kentucky and Southern Indiana markets certainly compliment and add further shareholder value to our Owensboro, Kentucky and Evansville, Indiana locations. We value the opportunity to assist our professional bankers in these new markets by providing new products and services.”
The transaction is subject to approval and customary closing conditions and expected to close in the first half of 2010.
