A bank with a large regional presence will become the second largest Michigan-based bank after it closes a $120-million acquisition.
Chemical Financial Corp., the holding company for Chemical Bank in Midland, said today that its agreement to acquire Northwestern Bancorp Inc., the holding company for Northwestern Bank in Traverse City, is an all-cash transaction.
Chemical will gain 25 locations in 11 counties, plus $758 million in deposits, $502 million in loans, almost $1 billion in wealth management accounts and a $1.3 billion mortgage servicing portfolio.
Chemical expects to acquire all outstanding shares of Northwestern common stock, pending regulatory approval and approval of Northwestern shareholders. The deal is expected to close in the third quarter of 2014.
Northwestern Bank will then operate under the Chemical Bank name, with one independent member of Northwestern’s board of directors joining Chemical’s board.
Chemical Bank expects the transaction, due to cost savings, to immediately increase earnings per share by about 16 percent. Cost savings are anticipated to reach about $11 million a year, within six months after closing. Pre-tax acquisition-related and integration costs are predicted to be about $13 million.
David B. Ramaker, chairman and CEO of Chemical Financial Corp, said the banking philosophies and cultural traits of the two banks align, and “their branch networks are complementary. As a result, the transaction will provide Chemical with a leading position in northern Michigan, expanding the breadth of our footprint and providing entry into several new markets where our robust product and service offerings, especially on the lending side, will provide significant growth potential. Furthermore, Northwestern’s productive fee-based businesses, including wealth management and residential mortgage origination and servicing, will enhance our efforts in these areas.”
Chemical said it will have the largest number of branch locations outside of the Detroit MSA of any financial institution in Michigan, and become the largest Michigan-based financial institution after Flagstar Bancorp in Troy. Chemical would also be the eighth largest bank operating in Michigan, based on deposit market share; and the third largest in the Traverse City MSA.
Chemical said that due to regulatory review, it may be required to divest one acquired branch in the Gaylord area. It is also considering the consolidation of four other branches in three communities where Chemical and Northwestern have overlapping locations.
Chemical Bank, which acquired 21 branches and accounts from Ionia-based Independent Bank Corp. in late 2012, has 156 offices in 38 Lower Peninsula counties, with total assets of $6.2 billion at the end of 2013. Chemical Financial Corp.’s common stock trades on the NASDAQ stock market under the symbol CHFC.
Northwestern Bank, a Michigan chartered savings bank, had $845 million in total assets, $502 million in total loans, $758 million in total deposits and $975 million in assets under management at the end of 2013.