Two Michigan community banks scuttled a $13.5 million merger deal after the smaller one decided it wanted to remain independent.
Ionia-based Independent Bank Corp. and Thumb National Bank and Trust Co., Pigeon, Mich., said in a press release they "had been unable to agree on certain material terms of the proposed transaction."
But Paul Clabuesch, president and chief executive of Thumb National, said there were no due diligence issues, personality conflicts, or lack of authority for him in his new position.
"I just said I'd rather be a community banker than a corporate banker," he said in an interview.
Independent president Charles C. Van Loan declined to elaborate on why the deal fell apart.
Tony Howard, a bank analyst at First of Michigan Corp., Detroit, said he was surprised the deal had unraveled. "Typically, for a smaller bank, it's a done deal" by the time a letter of intent is signed, he said.
The companies executed a letter of intent in mid-December, in which $516 million-asset Independent would have acquired $99 million-asset Thumb National, named for the thumb-shaped region in the eastern part of Michigan's lower peninsula.
Thumb National would have become part of Independent Bank East Michigan.
Mr. Van Loan said Independent is "always looking for opportunities for banking organizations to join us."
Mr. Clabuesch, on the other hand, said Thumb National would not entertain other acquisition offers. "We're going to remain independent and form a one-bank holding company," he said.
Thumb National, however, may expand from its existing three locations, he said.
Both companies did well in 1994. Independent reported increased net income for 1994 of $6 million, or $2.30 per share, up from $5.6 million, or $2.15 per share in 1993. Return on assets was 1.25%, and return on equity was 15.22%.
Thumb National expects earnings of just under $700,000 for 1994, up from about $600,000 in 1993, Mr. Clabuesch said. He expects yearend ROA of 0.85% and ROE of 11.1%.
When the companies announced their $13.5 million deal, they said Thumb National stockholders would get 5.2812 shares of Independent common stock in a tax-free exchange for each share of Thumb National common stock.
This isn't the first time this year that a smaller bank has backed out of a merger agreement. A week ago, shareholders of Tampa Banking Co. rejected a proposed acquisition by AmSouth Bancorp because shares of the bigger company were depressed and made the deal less attractive.
AmSouth had agreed last February to acquire Bank of Tampa in a stock exchange valued at $32.3 million.