Academic journal article Federal Reserve Bulletin

Order Approving the Merger of Bank Holding Companies, the Merger of Banks, and the Establishment of Branches FRB Order No. 2016-14 (August 8, 2016)

Academic journal article Federal Reserve Bulletin

Order Approving the Merger of Bank Holding Companies, the Merger of Banks, and the Establishment of Branches FRB Order No. 2016-14 (August 8, 2016)

Article excerpt

Chemical Financial Corporation

Midland, Michigan

Chemical Financial Corporation ("Chemical"), Midland, Michigan, a financial holding company within the meaning of the Bank Holding Company Act of 1956 ("BHC Act"), (1) has requested the Board's approval under section 3 of the BHC Act (2) to merge with Talmer Bancorp, Inc. ("Talmer"), and thereby indirectly acquire Talmer Bank and Trust ("Talmer Bank"), both of Troy, Michigan.

In addition, Chemical's subsidiary state member bank, Chemical Bank, Midland, Michigan, has requested the Board's approval under section 18(c) of the Federal Deposit Insurance Act ("Bank Merger Act") to merge with Talmer Bank, with Chemical Bank as the surviving entity. (3) Chemical Bank also has applied under section 9 of the Federal Reserve Act ("FRA") to establish and operate branches at the main office and branches of Talmer Bank. (4)

Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (81 Federal Register 20383 (April 7, 2016)). (5) The time for submitting comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act, the Bank Merger Act, and the FRA. As required by the Bank Merger Act, a report on the competitive effects of the merger was requested from the United States Attorney General and a copy of the request has been provided to the Federal Deposit Insurance Corporation ("FDIC").

Chemical, with consolidated assets of approximately $9.3 billion, is the 126th largest insured depository organization in the United States. (6) Chemical Bank controls approximately $7.7 billion in consolidated deposits, which represent less than 1 percent of the total amount of deposits of insured depository institutions in the United States. Chemical controls Chemical Bank and operates only in Michigan. Chemical Bank is the eighth largest insured depository institution in Michigan, with deposits representing 3.8 percent of the total deposits of insured depository institutions in that state.

Talmer, with consolidated assets of approximately $6.7 billion, is the 169th largest insured depository organization in the United States. Talmer currently controls approximately $5.2 billion in consolidated deposits, which represent less than 1 percent of the total amount of deposits of insured depository institutions in the United States. Talmer controls Talmer Bank, which operates in Illinois, Indiana, Michigan, Nevada, and Ohio. Talmer Bank is the 11th largest insured depository institution in Michigan, controlling deposits of approximately $3.5 billion, which represent 1.9 percent of the total deposits of insured depository institutions in that state.

On consummation of this proposal, Chemical would become the 87th largest depository organization in the United States, with consolidated assets of approximately $16.0 billion, which represent less than 1 percent of the total assets of insured depository institutions in the United States. Chemical would control consolidated deposits of approximately $12.8 billion, which represent less than 1 percent of the total amount of deposits of insured depository organizations in the United States. In Michigan, Chemical Bank would become the sixth largest depository organization, controlling deposits of approximately $10.9 billion, which represent 5.7 percent of the total deposits of insured depository institutions in that state.

Interstate and Deposit Cap Analysis

Section 3(d) of the BHC Act generally provides that, if certain conditions are met, the Board may approve an application by a bank holding company to acquire control of a bank located in a state other than the home state of the bank holding company without regard to whether the transaction is prohibited under state law. (7) Under this section, the Board may not approve an application that would permit an out-of-state bank holding company to acquire a bank in a host state if the bank has not been in existence for the lesser of the state statutory minimum period of time or five years. …

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