Mackinac Financial in Manistique, Mich., has agreed to buy First Federal of Northern Michigan Bancorp in Alpena.

The $980 million-asset Mackinac said in a press release Wednesday that it will pay $33.8 million in stock for the $320 million-asset First Federal. Shareholders of First Federal will also receive an $8 million special dividend before the deal is completed.

The deal is expected to close in the second quarter.

Mackinac said it expects the deal to be 8% accretive to its 2018 earnings per share, excluding merger-related costs, and 16% accretive the next year. It should take three years or less to earn back the expected dilution to Mackinac’s tangible book value.

Michael Mahler, First Federal’s CEO, will become executive vice president of community banking and administration at Mackinac, where he will oversee retail lending and branch banking, human resources, professional development and marketing. A First Federal director will join Mackinac’s board.

“We believe the customer-centric cultures and community bank oriented traditions of our two organizations are very complementary and were the driving impetus for the combination of the two banks,” Kelly George, Mackinac’s president and CEO, said in the release.

Piper Jaffray and Honigman Miller Schwartz and Cohn advised Mackinac. ProBank Austin and Shumaker, Loop & Kendrick advised First Federal.

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