Independent Bank (IBCP) Sells 21 Branches to Chemical Bank (CHFC)

December 10, 2012 8:36 AM EST
Independent Bank Corporation (NASDAQ: IBCP) today announced that on Friday, Dec. 7, 2012, its subsidiary bank, Independent Bank, closed on the transaction to sell 21 of its branches to Chemical Bank (Nasdaq: CHFC) , headquartered in Midland, Michigan. The branches sold included 6 branch locations in the Battle Creek market area and 15 branch locations in Northeast Michigan.

The transaction resulted in the transfer of approximately $405 million of deposits to Chemical Bank in exchange for the payment of a deposit premium of approximately $11.5 million. This represents a deposit premium of 4.0% on certain core deposits, 3.0% on other core deposits and 1.5% on certain "out of market" deposits. Chemical Bank also purchased (at a discount of 1.75%) 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 end.

The Company expects to report a net gain on this branch sale of approximately $5.4 million in the fourth quarter of 2012 as well as an increase in Tier 1 capital of approximately $8.0 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. On a pro forma basis using Sept. 30, 2012 financial data, the sale of the branches is projected to increase Independent Bank's Tier 1 capital ratio from 7.29% to 7.96% (based on estimated average total assets for the fourth quarter of 2012) and its total risk-based capital ratio from 13.22% to 14.31% (based on estimated risk weighted assets at Dec. 31, 2012). If the Tier 1 Capital ratio was calculated based on estimated total assets at Dec. 31, 2012 (rather than estimated average total assets for the fourth quarter of 2012) this ratio would be approximately 9.12%.

Following this transaction, Independent Bank will continue to operate approximately 70 branch locations throughout Michigan.

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