Chemical Financial (CHFC) in Midland, Mich., has agreed to buy Northwest Bancorp in Traverse City, Mich.

Chemical will pay $120 million in cash for the $845 million-asset Northwest. Chemical, with $6.2 billion in assets, said in a press release Tuesday that it expects the acquisition to be immediately accretive to earnings per share, with $11 million in annual cost savings and $13 million in merger-related expenses.

"We view [Northwestern] as the premier northwestern Michigan community banking franchise," David Ramaker, Chemical's chairman, president and chief executive, said in the release. "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."

The deal is expected to make Chemical the eight-largest bank in Michigan, with $5.1 billion in loans, $5.9 billion in deposits and 181 branches. The company said it may have to divest a branch in Gaylord, Mich., and it expects to close four other branches.

Chemical said it expects to complete the acquisition in the third quarter.

Chemical was advised by Keefe, Bruyette & Woods; and Donnelly Penman & Partners and Warner Norcross & Judd. Northwestern was advised by Sandler O'Neill and Silver, Freedman, Taff & Tiernan.

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