UCB to acquire local Integra branches

Wanda English Burnett
Staff Writer

According to a joint announcement by United Community Bank (UCB) and Integra, the branches of Integra in Ripley County will be purchased by UCB. The three branches are located in Versailles, Milan, and Osgood. The announcement also noted that UCB has agreed to acquire a group of commercial and residential mortgage loans from Integra.

UCB will assume approximately $54.4 million of deposit liabilities related to the three branches, as well as $38.6 million of branch loans and $12.3 million of additional commercial and residential mortgage loans selected by UCB that were originated in other Integra offices.

“We are excited about this opportunity to expand our banking operations into neighboring Ripley County,” noted President and Chief Executive Officer of United Community Bank, William F. Ritzmann.

“Customers of the branches should know that we are working diligently with Integra so that the transition will be seamless to them. We are also pleased that, following initial transaction expenses, this transaction is expected to be immediately accretive to earnings per share for United Community Bancorp’s shareholders once the transaction closes,” Ritzmann commented.

UCB will now have nine Indiana branches - four in Lawrenceburg; one each in Aurora, St. Leon, Osgood, Milan, and Versailles.

United Community Bank will pay a 4.50% deposit premium for the deposit liabilities it assumes, with the exception of municipal deposits that are issued after the date of the agreement, which will be acquired at par, while the loans will be acquired at their outstanding principal balance. UCB will not assume any brokered deposits or Keogh accounts in the transaction.

According to a press release, the three banking office premises will be sold at their fair market value and all other fixed assets will be sold at their book values.

Both Integra and UCB expect that the transaction will have a minimal impact on the liquidity of either company, as it has been designed to be liquidity neutral, meaning that minimal cash is expected to exchange hands. The transactions are subject to customary conditions, including regulatory approval.
Both parties expect the branch purchase transaction to be complete in the first half of this year.

“We are pleased to work with the team at United Community Bank to complete this transaction,” noted Michael J. Alley, chairman and chief executive officer of Integra. “Our Integra associates in Milan, Osgood, and Versailles have done a great job serving their customers and I am confident that this will continue.”

Alley continued, “This divestiture enhances our capital and is part of a multi-step strategy we are executing that will improve our capital and liquidity positions, reduce our credit risk and accelerate our return to profitability. We expect to execute additional branch sales in 2010, as well as sales of both non-performing and performing loans. Based upon letters of intent we have received from other institutions who have performed or are currently performing due diligence, we expect to announce additional agreements for sales in the next 90 days that will provide additional capital and narrow our operating footprint.”