Talmer Bancorp in Troy, Mich., will record a nearly $14 million charge in the fourth quarter tied to ending its loss-share agreements with the Federal Deposit Insurance Corp.
The $6.5 billion-asset company paid $16.3 million to the Federal Deposit Insurance Corp. to cover the early termination of loss-share agreements tied to four banks and to eliminate a warrant associated with its first failed-bank purchase. Talmer said the transaction, along with the writeoff of the remaining FDIC indemnification asset and FDIC receivable, will result in a one-time, after-tax charge of about $13.9 million, or 20 cents a share.
Talmer said in a press release Monday that the early termination eliminates further negative accretion on the FDIC indemnification asset, which totaled $26.4 million in 2014 and $22.2 million during the first nine months of this year. The company also said it would reclassify covered loans, which had a balance of $186.6 million on Sept. 30, to uncovered loans, and will reclassify covered other real estate, which totaled $5.6 million, to uncovered other real estate.
"We are pleased to have reached an agreement with the FDIC that is a mutually beneficial conclusion to our partnership with the FDIC with respect to our failed-bank acquisitions," David Provost, Talmer's president and chief executive, said in the release. Provost said the company should be able to earn back expected dilution to tangible book value in five quarters.
"Other additional benefits of loss share termination will include the greater financial transparency and comparability to our peers," Provost said.
Talmer joins a growing list of banks that are buying out the loss-share agreements tied to failed bank purchases made in the aftermath of the financial crisis.