Friday, December 05, 2014YOUNGSTOWN, Ohio -- Talmer Bancorp Inc., holding company of Talmer Bank and Trust, has been remarkably candid in its plans to grow though acquisition.
Its most recent Form 8-K filed with the U.S. Securities and Exchange Commission is an account of strong growth and the rapid and rational integration of the banks it’s acquired since 2009.
Talmer, based in Troy, Mich., acquired the former First Place Bank in bankruptcy court in December 2012. In its Form 8-K submitted to the U.S. Securities and Exchange Commission Nov. 13, senior management says it sees 223 “opportunities” for growth through acquisition in Ohio and Michigan.
These opportunities consist of three distressed banks in Michigan and two in Ohio; 15 stressed banks in the Wolverine State and seven in the Buckeye State; and 126 “open bank opportunities” in Ohio and another 70 in Michigan.
The open banks have assets that range from $100 million to $1.5 billion, according to the SEC filing.
When Talmer acquired First Place Bank, its parent, First Place Financial Corp., listed assets of $3.2 billion. Talmer acquired the $2.2 billion in assets of the bank for $45 million and pledged to infuse $205 million in capital once the sale was completed. Forty-three of the Talmer offices in Michigan and Ohio were First Place Bank branches.
As it has done with the other banks it acquired, Talmer has replaced the old management team at First Place with “new front-line executives and support teams.”
Mark Wenick, executive vice president for wealth management at First Place, left to take a similar position in the Youngstown office of First National Bank of Pennsylvania. Last April, Talmer tapped him to become its executive managing director for the Mahoning Valley region.
Talmer ranks sixth in the Youngstown-Warren market.
In its efforts to become more efficient, Talmer has not hesitated to reduce the number of full-time equivalent employees as it’s acquired banks.
In the first quarter of 2013, Talmer had 1,585 FTE employees that rose to 1,623 the second quarter. Since then, the number of FTE employees has steadily dropped to 1,151 the third quarter of this year, the SEC filing states.
And its efficiency ratio reflects the cost savings from integrating its acquisitions: 78.2% the first and second quarters of 2013, spiking to 88.2% the last quarter a year ago to 70.8% at Sept. 30.
Formerly First Michigan Bancorp, Talmer had assets of $70 million in 2009 and that figure today is $5.7 billion.
While most Talmer offices are in Ohio, which has 27, and Michigan, 46, it has a small presence in Indiana, two branches; Illinois, one branch; and Nevada, one. It sold its office in Albuquerque, N.M., and “a substantial portion of New Mexico loans [July 18] with a modest gain on the sale,” Talmer said in its 8-K.
The holding company is completing its purchase of First of Huron Corp., Bad Axe, Mich., parent of Signature Bank, which has eight branches, $234 million in assets and $201 million in deposits.
In the all-cash agreement, Talmer is paying $13.4 million and the sale was expected to close this quarter or next. Talmer says it “expects the acquisition to be immediately accretive to earnings per share, exclusive of transaction and integration-related expenses, and to yield a tangible book value earn back of less than 2.5 years.”
As with First Place, Talmer has grown by acquiring other banks that were having difficulties, reporting losses, or closed by state departments of financial institutions.
Its acquisitions in 2010 of CF Bancorp in Huron, Mich. ($941 million in assets, $1.2 billion in deposits) and First Banking Center in Wisconsin ($684 million in assets, $475 million in deposits) were with the Federal Deposit Insurance Corp. as receiver. So, too, were it two acquisitions in 2011, Peoples State Bank, Hamtrack, Mich. ($390 million in assets, $386 million in deposits) and Community Central Bank, Mount Clemens, Mich. ($402 million in assets, $302 million in deposits).
It acquisition of the bank in Wisconsin, described as “strategic,” added $26 million in assets to Talmer Bancorp.
As noted, First Place Bank was acquired in bankruptcy, as was Michigan Commerce the first of this year. Michigan Commerce Bank, Ann Arbor, added $910 million in assets and $858 million in deposits.
Factors in its internal growth, which bankers like to call “organic growth,” are a “demonstrated ability to reduce cost of deposits by growing core funding base,” Talmer says, to 0.23% today from 0.82% in the first quarter of 2002.
Talmer reports it has “sextupled organic loans since 2011” because of its focus on middle-market commercial and industrial customers.
Its loan portfolio consists of commercial and industrial (C&I) lending, 32%; commercial real estate, 25%’ real estate construction, 4%, residential or mortgage lending, 35%; and consumer lending, 4%.
Forty-seven percent of its loans are to customers in Michigan, 26% in Ohio, 3% in Wisconsin, another 3% in Nevada, 8% in Illinois, 5% in Indiana, and 8% other.
The net interest margin Talmer has reported is well above the average for the banking industry, even allowing for the price – reflected as “excess accretable yield” – it’s paid the FDIC for its role in assuming the assets of the failed or closed banks.
In the first quarter of 2013, Talmer would have reported a net interest margin of 4.89% but the excess accruable yield reduced the figure to 4.22%.
In the second quarter of this year, net interest margin without excess accretable yield was 4.35%, with it, 3.72%. And for the third quarter, the figures were 4.04% and 3.69% respectively, more in line with the industry.
Copyright 2014 by The Business Journal, Youngstown, Ohio.
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