Chemical Name Will Replace Talmer Bank and Trust
YOUNGSTOWN, Ohio – Once the merger of the merger of Chemical Financial Corp. and Talmer Bancorp Inc. is completed, the most noticeable change here will be the Chemical name replacing Talmer Bank and Trust on its 16 offices in the Mahoning Valley.
Chemical and Talmer announced Tuesday that they will merge the second half of his year and form a bank holding company with $16 billion in assets.
Talmer has assets of $6.6 billion and 81 branches. Among them are 51 in southeastern Michigan, 27 in northern Ohio (eight each in Mahoning and Trumbull counties, five in and around Sandusky, one on Columbus) and one in Chicago.
Chemical, based in Midland, Mich., home of Dow Chemical Co., has assets of $9.2 billion, and 175 offices in lower Michigan, most of them outside Greater Detroit.
So there is little geographic overlap and the chairmen of Chemical and Talmer, David B. Ramaker and David T. Provost respectively, billed their agreement as “creat[ing] the preeminent Michigan-based banking franchise, the largest community bank headquartered in Michigan.”
They made a presentation in a conference call with analysts and reporters.
Pro forma, the greater Chemical Bank would have some $16 billion in assets, $12 billion in loans and $13 billion in deposits.
For each common share of Talmer, Chemical will exchange 0.4725 share of its stock. The purchase price – in a conference call, both chairmen stressed the agreement is a merger, not an acquisition – of $1.1 billion costs, consists of 90% stock and 10% cash.
The companies expect to incur $62 million in pretax merger expense, $44 million after-tax, divided equally between Chemical and Talmer.
“It is not a sale,” Ramaker told an unhappy Talmer shareholder who asserted on the conference call that Chemical is buying Talmer and not paying enough. “You can call it a merger,” he told the senior management of Chemical and Talmer, “but it’s really a sale.” He said the agreement benefits Chemical more than Talmer. “Why is it a good deal for Talmer?” he asked.
“We look upon it as a merger of equals,” Provost stated, informing the shareholder Talmer did not entertain any other offers in response to his question, “Did you shop the company?”
The long-time Talmer shareholder insisted Chemical is getting a bargain. The management structure of the resultant entity would seem to support his claim that Chemical is buying Talmer.
Markets Tuesday also seemed to support the shareholder’s assertion. Chemical Financial closed at $29.92, up 22 cents or 0.74%, while Talmer lost 82 cents a share, 5.06%, to close at $15.19.
Despite Talmer shares making up 45% of stock of the new entity, Ramaker will remain president and CEO of the larger Chemical Bank although Provost will be chairman.
Both Chemical and Talmer are the results of aggressive acquisition strategies since 2010, Talmer coming into the possession of the assets of eight banking entities, including the former First Place Financial Corp. of Warren ($2.64 billion). Chemical has completed 11 acquisitions, either bank holding companies or branches of other banks, all in Michigan.
Among the benefits of the agreement, Ramaker and Provost noted, is the combined entity surpassing $10 billion in assets, “mitigating additional regulatory costs.”
Earnings per share should be 8% higher the first year than if they continued to operate independently, they said, and they project “a tangible book value earn-back of 3.25 years.”
The banks have excellent efficiency ratios – both are well below 60% — and Ramaker and Provost expect to save $52 million in annual expense, or 27.5%, once they integrate their operations.
Both Provost and Ramaker emphasized that the larger Chemical would continue their “commitment to community banking and local decision making.”
Copyright 2023 The Business Journal, Youngstown, Ohio.