Chemical Financial Corp. and Shelby (Mich.) Financial Corp. said Wednesday that their negotiations had been "discontinued by mutual agreement."

On Nov. 3, $1.7 billion-asset Chemical announced it had signed a letter of intent to buy Shelby for $25 million in stock. The letter of intent was nonbinding.

But officials from $107 million-asset Shelby changed their mind about selling.

"We just finished our best year in the history of the bank, and the time did not seem right to sell," said Jerry L. Austin, Shelby's president and chief executive officer. "We have nothing but respect for the Chemical organization, but a lot of our shareholders and employees did not want to sell this bank."

"It didn't seem like it was working out," said Aloysius J. Oliver, president and chief executive officer of Chemical, "so we decided to part ways while we were still friends."

Chemical's shares, which are traded on Nasdaq, closed Thursday at $43.375, up 37.5 cents. Shelby's prices were not available. - Louis Whiteman

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