First State Bancorporation has reached a definitive agreement to sell its Colorado branches to Great Western Bank, a South Dakota-based subsidiary of National Australia Bank.
The agreement is subject to regulatory approval and it is anticipated to close in the summer of 2009. The terms of the transaction call for the transfer of approximately $444m in loans, $477m in deposits, $19m of buildings and equipment, and the payment of a deposit premium of approximately $28m. After the write-off of the core deposit intangible associated with these deposits and transaction costs, First State expects to record a pretax gain of approximately $16m.
First State also announced that it has withdrawn its application for troubled asset relief programme (TARP) funding through the US Treasury Department.
Michael Stanford, president and CEO of First State, said: We anticipate that this transaction will help us achieve the regulatory requirements for capital levels in the near future. We plan to intensify our efforts in our legacy market, New Mexico, which has significant growth potential and continues to outperform the nation as a whole in terms of unemployment. We will continue to downsize our loan portfolio in order to strengthen our capital ratios and liquidity.
After careful consideration, we believe that it is in the best interests of our shareholders to proceed on a course of action that does not include TARP funding.
