First Interstate BancSystem in Billings, Mont., has agreed to buy Cascade Bancorp in Bend, Ore.

The $9 billion-asset First Interstate said in a press release Thursday that it will pay $589 million, or $7.60 a share, for the $3.2 billion-asset Cascade. The cash-and-stock deal, which is expected to close in mid-2017, values Cascade at 215% of its tangible book value.

The deal is the seventh-biggest bank merger of 2016 by overall price, based on data from Keefe, Bruyette & Woods and S&P Global Market Intelligence.

First Interstate will have $12.1 billion in assets, $10.1 billion in deposits and $7.6 billion in loans when the deal closes. At $10 billion in assets, banks face tougher regulations including mandatory stress testing and caps on interchange fees. First Interstate said that crossing that threshold will cost it $8 million in annual interchange revenue starting in the third quarter of 2018, while Cascade will lose $3.5 million annually.

The transaction is expected to generate 8% earnings accretion in 2018, taking into account the cap on interchange fees. Over the longer term the deal should boost profit by 10% annually.

First Interstate expects to incur $40 million in merger-related charges, though the company plans to cut Cascade’s noninterest expenses by 28%. It should take five years to earn back the deal's expected 8.8% dilution to First Interstate’s tangible book value.

Barclays Capital and Luse Gorman advised First Interstate. Piper Jaffray and Hunton & Williams advised Cascade.

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