GRAND RAPIDS — Independent Bank Corp. raised $40 million in a debt offering that comes amid the economic downturn and uncertainty from the COVID-19 pandemic.
The Grand Rapids-based Independent Bank (Nasdaq: IBCP) completed the offering of subordinate debt through a private placement. Proceeds raised from the fixed-to-floating rate subordinated notes that are due in 2030 “will be utilized for general corporate purposes,” according to the bank.
Both the corporate holding company and Independent Bank “are well capitalized today and our forecasts have us continuing to be so prospectively,” President and CEO Brad Kessel said in an email to MiBiz. At a 5.95 percent pre-tax interest rate, the subordinated debt “is considered inexpensive capital” that Independent Bank raised for the present environment, Kessel said.
“With the significant uncertainty in the current operating environment, we thought it prudent to raise this capital today as it will provide additional flexibility for greater-than-expected challenges and/or take advantage of opportunities over the next 12 to 36 months,” he said.
Kroll Bond Rating Agency assigned the subordinate notes an investment grade rating of BBB-. Keefe, Bruyette & Woods Inc. served as the sole placement agent for the offering and was advised by Squire Patton Boggs LLP.
Grand Rapids-based Varnum LLP also advised Independent Bank on the offering.
Independent Bank has 68 offices in the Lower Peninsula, plus 12 loan offices in Michigan and Ohio. The corporation in late April reported lower net income of $4.8 million for the first quarter, or 21 cents per diluted share, which was attributed to one-time costs that include a significantly higher quarterly provision of $6.7 million to cover loan losses stemming from the COVID-19 pandemic.
Some banks have been raising capital amid the pandemic and downturn.
Grand River Commerce Inc., the parent company of Grand River Bank in Granville, seeks to raise $7.5 million through a debt offering, as MiBiz reported this week.
Detroit-based TCF Financial Corp. earlier this month closed on a $150 million subordinated debt offering.