Michigan Banks Discussed Merger Four Times in Seven-Year Window

First Federal of Northern Michigan Bancorp's agreement to buy Alpena Banking is a lesson in persistence and keeping communication lines open.

The Alpena, Mich., companies recently disclosed in regulatory documents that First Federal and Alpena considered merging three times between 2006 and 2011 — often delaying talks due to regulatory examinations — before striking a deal on their fourth effort earlier this year. First Federal in January agreed to pay $4.3 million for Alepena.

The $214 million-asset First Federal and the $74 million-asset Alpena first began informal discussions in mid-2006, signing a confidentiality agreement. First Federal produced a letter of intent, providing a range for the merger consideration, though Alpena's board rejected the offer and terminated discussions.

Talks were resurrected in November 2009. Key leaders from the banks met and Austin Associates provided the banks with merger-related analysis in March 2010. Discussions stalled a month later when Alpena's bank was hit with a consent order from the Federal Deposit Insurance Corp. and its state regulator.

A third attempt took place in August 2011, leading to another confidentiality agreement. First Federal, however, chose to put off further discussions because it was waiting for its first examination from the Office of the Comptroller of the Currency. The examination was completed in August 2012, prompting the banks to once again revisit a merger.

Regulatory concerns continued to stymie merger talks. The banks decided to put discussions on the backburner until they had completed another round of examinations. Talks resumed near the end of last year, heating up in November.

The merger agreement was signed on Jan. 23, after several rounds of revisions, and announced later that day.