Nearly a year after calling off a stock sale that would have sharply diluted the value of its shares, Independent Bank (IBCP) in Ionia, Mich., said it would instead raise capital by selling off a batch of branches.

The $2.4 billion-asset company said after markets closed Wednesday that it is has agreed to sell 21 branches in its home state to rival Chemical Financial (CHFC) in Midland, Mich., for about $12.4 million.

The sale, expected to close next quarter, would provide a significant boost to the company's capital ratios, which have been lowered in recent years by steep losses on real estate loans.

Independent had planned to raise $110 million in a stock sale but it called off the offering in July of last year In Wednesday's news release, President Brad Kessel, said that the 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."

He added that by avoiding the stock sale, the company is able to protect its deferred tax asset.

Fifteen of the branches are in the northeast Michigan and six are in the Battle Creek area. Once the deal closes, Independent would have roughly 80 branches in its home state.

For the $5.5 billion-asset Chemical, the second-largest bank based in Michigan, the deal would increase its number of branches to 163.

"Acquiring these branches continues to accretively expand our footprint into new markets and provides us with an excellent opportunity to grow top line revenue through our core strategy of community banking" David B. Ramaker, Chemical's chairman, president and chief executive said in a news release. "We are excited about servicing the customers and communities associated with these branches."

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