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Independent Bank Corporation Announces Definitive Agreement For Sale Of Branches

Stocks in this article: IBCP

IONIA, Mich., May 23, 2012 /PRNewswire/ -- Independent Bank Corporation (NASDAQ: IBCP) today announced that its subsidiary bank, Independent Bank, has signed a definitive agreement to sell 21 of its branches to Chemical Bank, headquartered in Midland, Michigan.  The branches to be sold include 6 branch locations in the Battle Creek market area and 15 branch locations in Northeast Michigan. 

It is expected that the transaction will result in the transfer of approximately $420 million of deposits to Chemical Bank in exchange for the payment of a deposit premium of approximately $12.4 million.  This represents a deposit premium of approximately 3.1% on identified core deposits. Certain non-core deposits will be transferred at no premium. Chemical Bank will also have the right to purchase certain loans originated at the branches being sold, at a discount of 1.75%.  The sale is expected to be completed by the end of the third quarter of 2012, subject to customary regulatory approvals and the satisfaction of other customary terms and conditions of sale.

"This branch sale allows us to significantly advance the final phase of our capital plan and achieve our targeted bank regulatory capital ratios without the dilution of a common stock offering. Further, by avoiding a large common stock issuance, we are able to protect our deferred tax asset. 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," said Brad Kessel, President of Independent Bank.  "The Board and management are thankful to the loyal customers and dedicated employees in the markets being divested," Kessel concluded.

The sale of the branches 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%, based on March 31, 2012 financial data.

The deposits being transferred represent approximately 19% of the Bank's total deposits as of March 31, 2012.  Following the transaction, the Bank will continue to operate 80 branch locations throughout Michigan.

Stifel Nicolaus Weisel acted as financial advisor to Independent Bank Corporation and Varnum LLP served as legal advisor.

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