Mackinac Financial Corp., the largest bank headquartered in Michigan’s Upper Peninsula, announced late Tuesday its intent to purchase First Federal of Northern Michigan Bancorp and its wholly-owned subsidiary, First Federal of Northern Michigan, Alpena, in an all-stock acquisition. With the addition of First Federal $320 million in assets, Mackinac’s subsidiary, mBank, Manistique, will become a $1.3 billion institution.
“Strategically, this make sense for us on all fronts,” Mackinac Chairman Paul Tobias said. “Our strategy has been to deliver loan-centric banking services to communities that have both commercial and consumer opportunities and low-cost core deposits. We build our annual plan on organic growth but have been and will continue to seek out acquisitions that create scale and support our strategy.
“FFNM in Alpena and surrounding markets adds low cost deposits and a very strong mortgage business. More importantly, we are adding team members to help us execute our strategy.”
For each share of First Federal stock, shareholders will receive .576 shares of Mackinac stock, equaling approximately $33.8 million. Additionally, if First Federal maintains a minimum equity, shareholders will receive nearly $8 million in a cash dividend immediately prior to closing the deal.
FFNM CEO Michael Mahler will become mBank’s EVP of Community Banking and Administration, and remain in Alpena.
“The scale and lending limits of the commercial banking platform that Mackinac brings will combine with our robust mortgage platform to offer our valued clients an even more complete banking experience,” Mahler said. “More importantly, we have spent significant time with mBank’s leadership to ensure their culture, customer service approach, commitment to their employees and community focus is consistent with First Federal’s.”
Mackinac expects the purchase to be accretive to earnings per share by 8 percent in 2018, excluding transaction-related costs.