Independent Bank in Grand Rapids, Mich., has agreed to buy HCB Financial in Hastings, Mich.
The $5.5 billion-asset Independent said in a press release that it will pay $70.2 million in cash and stock for the $590 million-asset HCB. The deal, which is expected to close in the third quarter, priced HCB at 148% of its tangible book value.
HCB has a 1.50% cost of funds and 67% loan-to-deposit ratio.
The acquisition “is a perfect fit both geographically and culturally,” Brad Kessel, Independent’s president and CEO, said in the release. “By combining Highpoint’s strong core deposit base and deep community roots with our expanded product set, we are better positioned to serve the families and businesses of Michigan while delivering meaningful value to our shareholders.”
The deal is expected to be 6% accretive to Independent’s 2027 earnings per share, assuming fully phased-in expense cuts. It should take a little more than three years to Independent to earn back an estimated 4% dilution to its tangible book value.
Independent plans to cut 40% of HCB’s annual operating expense. It expects to incur $8.8 million of pretax merger-related expenses.
One HCB director will join Independent’s board.
Keefe, Bruyette & Woods and Varnum advised Independent. Hovde Group and Dickinson Wright advised HCB.