Two Michigan community banks plan to merge in a $174 million deal that would create the state's fourth-largest bank holding company, with 120 branches and assets of $3 billion.
Chemical Financial Corp. in Midland and Shoreline Financial Corp. in Benton Harbor have structured the deal as a tax-free exchange of shares. Shoreline investors would receive 0.64 shares of Chemical stock for each of their Shoreline shares. "For our shareholders, this affiliation will provide ownership in a growing organization with a 25-year history of consecutive increases in both annual per-share earnings and dividends," said Dan L. Smith, Shoreline Financial Corp.'s chairman and chief executive officer.
Chemical Financial Corp. is the holding company for 10 subsidiary banks. Shoreline and its banking subsidiary, Shoreline Bank, would become the 11th - at least initially.
Mr. Smith and Aloysius J. Oliver, Chemical's president and chief executive officer, are mulling a consolidation of some Chemical subsidiary banks, said Wayne Koebel, Shoreline's executive vice president and chief financial officer.
"Nothing has been decided yet, but discussions along those lines are taking place," Mr. Koebel said. He added that all of Shoreline's 370 employees would keep their jobs.
Mr. Koebel said also that Shoreline would also retain its local board of directors, and that its management team would remain intact. Mr. Smith would keep his job, as would James Milroy, the company's president.
Both Chemical and Shoreline are coming off banner second quarters. Shoreline, with assets of $1.1 billion, reported a record profit of $3.3 million, while $1.9 billion-asset Chemical's net income of $7.2 million was up 8.5% from the second quarter of 1999.
Chemical operates 88 branch offices in 24 counties spread across the middle of Michigan's Lower Peninsula. Shoreline Bank has 31 branches in southwestern Michigan and one in northern Indiana. None of the branches overlap, Mr. Koebel said.
"The nearest Chemical office is about 30 miles to the east of us," he said. "This is a really nice fit."
Shoreline would be Chemical Financial's first acquisition since May 1996, when it bought State Savings Bancorp in Caro, Mich. Shoreline has been more active. It bought State Savings Bank of Coloma, Mich., in December 1997, 13 months after Shoreline merged with SJS Bancorp of St. Joseph, Mich.
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