Dive Brief:
- Huntington Bank and TCF Bank agreed to merge Sunday in an all-stock deal to create a regional bank with nearly $168 billion in assets, $117 billion in loans, $134 billion in deposits and $22 billion in market value, the companies said in a press release. The deal values TCF at $6 billion, 11% above the level at which the bank's stock closed Friday.
- The bank will operate under the Huntington brand after the deal closes — a move expected in the second quarter of 2021. Huntington's chief executive, Stephen Steinour, will remain chairman, president and CEO of the holding company and CEO and president of the bank. TCF's executive chairman, Gary Torgow, will serve as chairman of the bank's board of directors.
- Adding TCF would boost Huntington's 839-branch network by a further 475 — for now — and expand its seven-state footprint to Wisconsin, Minnesota, South Dakota and Colorado. It would also fortify its foothold in Michigan, Illinois and Ohio, where fellow regionals Fifth Third (Cincinnati, $200.5 billion) and KeyBank (Cleveland, $169.0 billion) are based, and bring Huntington's asset total in line with both.
Dive Insight:
Talks of a merger between the two banks began in October and progressed quickly, Steinour told The Wall Street Journal. "This merger is an ideal opportunity; it bolsters both of us," he told the publication. "We'll be able to do things together that neither of us could do independently."
It also adds a layer of clarity to the sudden retirement — in late October — of TCF CEO Craig Dahl.
TCF roughly doubled its size when it completed a merger with Chemical Bank in August 2019. Chemical's former CEO, David Provost, who had served as vice chairman of TCF since that merger, succeeded Dahl as TCF's CEO in October, and has a history of shepherding bank deals to completion, American Banker reported.
Provost sold Talmer Bancorp to Chemical in 2016, then became Chemical's CEO after his predecessor suddenly left, the publication reported. The merger with TCF was announced in January 2019.
The combined Huntington-TCF entity would maintain two headquarters: its consumer business would run out of Columbus, Ohio, and its commercial bank — comprising 60% of the combined bank's loan portfolio — would be based in Detroit.
"This had to be a win-win or it wasn't worth doing," Steinour told the Detroit Free Press. "This is not sort of a wink and nod. This is a significant commitment to Detroit and Michigan."
At least 800 employees of the combined company — nearly three times the number TCF had planned — will be housed in a new Detroit office, the banks said in the release. That office is set to open in 2022, according to The Columbus Dispatch.
Huntington expects to cut $490 million in annual expenses from TCF's operating costs, according to the release.
"This merger combines the best of both companies and provides the scale and resources to drive increased long‐term shareholder value. Huntington is focused on accelerating digital investments to further enhance our ... customer experience," Steinour said in the release. "Together we will have a stronger company better able to support our customers and drive economic growth in the communities we serve."
The merger would likely be the second-largest banking deal proposed in the U.S. this year, behind last month's pending acquisition of BBVA's U.S. retail operations by PNC. The other largest regional bank tie-ups this year were October's proposed merger of equals between First Citizens and CIT, and CenterState's merger with South State, which was announced in January and completed in June.
Another Huntington commitment to Michigan comes in the form of $50 million the bank is giving to the Community Foundation for Southeast Michigan. That comes on top of a $20 billion, five-year effort the bank launched in September to improve economic opportunities in low-income communities and for people of color across its footprint.
TCF also recently announced a $1 billion commitment over five years to support minority-owned and women-owned small businesses, according to the Free Press.
"We will be a top regional bank, with the scale to compete and the passion to serve," Torgow said in the press release.
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