ALPENA - Two local banks announced in a press release on Thursday that they have reached an agreement to merge.
First Federal of Northern Michigan Bancorp, Inc., the parent company of First Federal of Northern Michigan, and Alpena Banking Corporation, the parent company of Bank of Alpena, jointly announced "execution of an agreement and plan of merger that provides for the integration of the two companies and their subsidiary community banking institutions."
The joint announcement was issued by Michael Mahler, president and chief executive officer of First Federal Bancorp, and Craig Kus, president and chief executive officer of Alpena Banking Corporation.
"Our respective boards and executive management teams share a common vision for this opportunity, that being a true union of complementary institutions," Mahler stated in the press release. "We believe the transaction will create a stronger community bank with enhanced asset generation capabilities that could not be achieved individually."
In connection with the all-stock transaction, which is based upon the pro rata tangible equity contribution of each company as of Sept. 30, 2013, each share of common stock of Alpena Banking Corporation will be converted into the right to receive 1.549 shares of First Federal Bancorp common stock. The transaction is intended to qualify as a tax-free reorganization for federal income tax purposes.
In the merger, Bank of Alpena's office will become a branch office of First Federal Bank.
"We believe that this transaction will combine two community banks in a manner that assures the best long-term interests of the customers, communities, employees and shareholders of both institutions," Kus said. "Customers of each institution should enjoy expanded and enhanced services and products, and the benefits of a larger branch network."
The combined company's leadership team will be comprised of executives from both organizations. Mahler will serve as the CEO, and Jerry Tracey will continue to serve as the executive vice president and chief lending officer. From Bank of Alpena Kus will serve as the president and CEO and Joseph Garber will serve as the chief credit officer. Board composition will be a combination of the majority of each company's board, including five members from First Federal Bank and four members from Bank of Alpena.
The merger agreement has been unanimously approved by the boards of directors of each company. The transaction is subject to customary closing conditions, including approval by the shareholders of First Federal Bancorp and the shareholders of Alpena Banking Corporation and applicable banking regulatory authorities. It is anticipated the transaction will close late in the second quarter of 2014 or in the third quarter of 2014.