TRAVERSE CITY — The Grand Traverse region’s burgeoning economy sparked the proposed merger of Northwestern and Chemical banks in a deal that will cause layoffs.
Chemical Financial Corporation President David Ramaker said today the bank will pay $120 million cash for Traverse City-based Northwestern, which employs 374 people and owns 25 branches in 11 northwestern Michigan counties.
Ramaker said the Midland-based financial institution wanted a presence in the Traverse City area financial market and Northwestern Bank was the perfect fit.
“If you look at our particular footprint of our company today ... the northwestern part of the state is where we are not,” Ramaker said. “We’ve looked at this area for a long time. The attractiveness is the vibrancy of it, the diversity of it, and, in partnering with someone like Northwestern, we truly get the depth and breadth of the market.”
Ramaker confirmed the merger will cause job losses.
“Anytime you do a merger like this, part of the way that you pay for that is, unfortunately, consolidations of jobs,” Ramaker said.
“Anyone who is servicing customers day in and day out, we need all those people,” Ramaker said. “They are the ones who are servicing the customers today. When you take a look at the operational side of the equation, that’s typically where, unfortunately, the positions are eliminated. Those are where the jobs are lost. We are looking at how we can minimize that in every way possible.”
The merger comes two months after Northwestern emerged from a consent agreement with federal regulators because of failures in some of Northwestern’s commercial loans in 2012. In September 2013 the Federal Deposit Insurance Corporation alleged Northwestern Bank’s former president, Harry “Scrub” Calcutt, and two other bank executives tried to hide in excess of $38 million in loan defaults by the bank’s largest borrower from the bank’s board of directors and government regulators.