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Sunday, 10 June 2012 21:18

Chemical grows statewide footprint with branch acquisitions

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WEST MICHIGAN — The pending acquisition of 21 offices from Independent Bank extends Chemical Financial Corp.'s footprint across the Michigan and furthers its ongoing expansion and growth strategy.

The Midland-based parent company of Chemical Bank will pay about $12.4 million to acquire six Independent Bank offices in Battle Creek and 15 in Northeast Michigan. Under the deal, Chemical Bank will assume about $420 million in customer deposits, pushing total deposits statewide to nearly $6 billion. Chemical will also acquire about $40 million in loans and expand its branch network to 163 offices across the Lower Peninsula.

The acquisition needs the approval of regulators and is expected to close in the third quarter.

Just two years ago, Chemical Financial acquired the former OAK Financial Corp., the parent company of Byron Bank, to expand its Grand Rapids-area presence. The acquisition of the Independent Bank offices "is just continuing to expound on what we're trying to do in the state of Michigan and in the marketplace, which is (to) continue to look for opportunities for expansion in areas where we think it makes sense for us," Chairman, President and CEO David Ramaker said.

"It continues to build our footprint as we continue to drive the thought process that we are the community bank for the state of Michigan," Ramaker said. "It's a great building block from a standpoint of branch offices and a customer base as well. We can really leverage that from a standpoint of working with these customers and continuing to build market share."

Statewide, Chemical Bank ranked 10th among 160 banks in 2011 in the FDIC's annual Summary of Deposits.

More recently, the bank reported deposits of $4.46 billion through 142 offices in 32 counties and assets of $5.45 billion as of March 31, 2012.

In the Battle Creek area, Chemical last year ranked fifth among 13 banks with a 9.12 percent deposit market share, according to the 2011 FDIC Summary of Deposits. Adding six offices to the three now in the Battle Creek area should make Chemical Bank the market leader and will fill what Ramaker calls a "considerable hole" along the I-94 corridor in the Southern Michigan market.

"This really fills in that footprint and allows us to really strengthen our market share as we look at the Southern Michigan market of our company," said Ramaker, who was recently named Banker of the Year by the Michigan Bankers Association. "It's just a natural one because of the hole we had in our market."

In recent quarterly earnings releases, Ramaker has spoken about wanting to expand the Chemical Bank franchise further across Michigan through acquisitions. Although he deferred direct comment about making additional acquisitions in the future, he said he does not anticipate changing the position he has previously voiced in quarterly releases.

Selling the 21 offices to Chemical Bank improves the Ionia-based Independent Bank's capital position without diluting a common stock offering. The deal involves about 19 percent of Independent's deposit base and will shrink its branch network to 80 offices.

"While exiting any market is difficult, we believe our remaining markets from West Michigan to Lansing, the Bay region and Southeast Michigan provide for significant growth in the future as well as the upside from the credit improvement we have been recently experiencing," Independent Bank President Brad Kessel said.

The deal came together as Independent sought to sell branches and Chemical had the ability and desire to make an acquisition.

"We're taking advantage of our financial strength and our position in the market place to look for opportunities and cultivate opportunities," Ramaker said. "We are doing what we have indicated what we were going to do: that we are interested in growing and that we are an avenue for those entities that are looking to divest their branches or ... to sell their franchise. We are there and ready to execute."

Stifel Nicolaus served as financial advisor and Varnum LLP was legal adviser for Independent Bank. Investment bank Keefe, Bruyette & Woods Inc. and Warner Norcross & Judd LLP advised Chemical Bank on the acquisition.

Read 2373 times Last modified on Thursday, 04 October 2012 00:29

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