Two big bank holding companies with huge name recognition in Michigan — Columbus, Ohio-based Huntington Bancshares and Detroit-based TCF Financial Corp. — are announcing plans for an all-stock merger valued at $22 billion.
The deal is expected to close in the second quarter, according to a press briefing given Sunday night with the Detroit Free Press.
The Huntington brand will survive, while the TCF name will disappear. The merger means that another purely Michigan-based bank will lose its identity. Many major banks in Michigan — Chase, Comerica, PNC, Bank of America and Fifth Third — are all headquartered in other states. Flagstar Bank is based in Troy, and Ally Financial, a bank holding company, is based in Detroit.
The latest merger, though, calls for keeping two headquarters for different operations in a unique commitment to Detroit and Michigan.
Huntington Bancshares will retain its headquarters in Columbus for the holding company and consumer banking operations.
A Detroit headquarters will be used for the combined company’s commercial banking arm. The bankers said 60% of loan portfolio business will be based in Detroit, while 40% will be in Columbus.
“Detroit will be a co-headquarters with Columbus,” said Huntington’s top executive Stephen D. Steinour.
“It must be a win for Michigan and Ohio,” he said Sunday night. He said the deal came together quickly after talks began at the end of October.
“This had to be a win-win or it wasn’t worth doing. This is not sort of a wink and nod. This is a significant commitment to Detroit and Michigan.”
Steinour noted that every other board meeting will be in Detroit and he will have an office in Detroit, as well as Columbus.
At least 800 employees of the combined company, nearly three times the number TCF had planned, will be housed in a new landmark office tower that will open in the future in downtown Detroit.
The major banking news comes nearly two years after TCF Financial, which had been based in Wayzata, Minnesota, and the Michigan-based Chemical Bank announced a $3.6-billion deal. Chemical Bank had a long history in Midland but moved its headquarters to Detroit in July 2018. That merger created the nation’s 27th largest bank and the largest such institution headquartered in Detroit.
The Huntington-TCF deal, which is subject to approval by shareholders and regulators, would create a regional bank that would rank in the top 10 in the country. The combined company will have approximately $168 billion in assets, $117 billion in loans and $134 billion in deposits.
While Huntington’s branches are easily spotted across Michigan — Huntington had 281 branches in Michigan as of early September — TCF has its name on the state’s largest convention center. TCF also announced plans to build an impressive, 20-story office tower in downtown Detroit.
The questions raised in Michigan involve as much about what’s likely to happen to various bank branches, as well as what’s next for Detroit’s major landmarks and development.
In September, Huntington announced a $5-billion, five-year commitment to give Michigan’s economy a much-needed boost to help small businesses, minority-owned businesses, homeowners and others.
TCF also recently announced a $1 billion commitment over five years to support minority-owned and women-owned small businesses, which will be added to Huntington’s commitment.
On Sunday, Huntington said it will contribute $50 million to a donor advised fund at the Community Foundation for Southeast Michigan to serve the needs of communities in Detroit and across the footprint of the combined bank. The donor advised fund will be in addition to commitments already made by both banks.
What about jobs?
Mergers and acquisitions are designed to grow a company but also involve ways to cut costs, including closing overlapping divisions or branches in some neighborhoods and communities.
Bank mergers had slowed down during the economic uncertainty created in 2020 after the coronavirus-driven recession. But bankers and others are growing more optimistic about the economy’s health given the expected widespread rollout of COVID-19 vaccines in 2021.
“Both banks feel there is a recovery that’s about to happen,” Steinour said.
The merger is projected to have an estimated cost savings of approximately $490 million or 37% of TCF’s non-interest expense, according to sources.
TCF has about 475 branches primarily located in Michigan, Illinois and Minnesota with additional locations in Colorado, Ohio, South Dakota and Wisconsin. TCF also conducts business across all 50 states and Canada through its specialty lending and leasing businesses.
Huntington has a network of 839 full-service branches, including 11 Private Client Group offices, and 1,330 ATMs across Ohio, Illinois, Indiana, Kentucky, Michigan, Pennsylvania and West Virginia.
The combined company, according to sources, will maintain its leading market position with the largest branch share and second position in consumer deposits in the markets where it operates. Huntington’s footprint will expand to include Minnesota, Colorado, Wisconsin and South Dakota, and Huntington will deepen its presence in Chicago.
No plans for job cuts were detailed in a phone briefing with the Free Press on Sunday night. But bankers said some overlap in branches exists and consolidations would take place.
“We do have some branches where we’re on one corner and TCF is on another,” Steinour said. “So there will be some consolidation to be sure.”
Who will be in charge?
Huntington’s Steinour will remain the chairman, president and CEO of the holding company and CEO and president of the bank after the merger is completed.
“We look forward to welcoming the TCF Team members. Together we will have a stronger company better able to support our customers and drive economic growth in the communities we serve,” Steinour said in a statement.
Huntington is focused on investing in technology and making digital investments, Steinour said Sunday.
Gary Torgow, the executive chairman of TCF Financial, will serve as chairman of the bank’s board of directors.
Torgow said the partnership will “provide us the opportunity for deeper investments in our communities,” as well as more jobs in Detroit. He said Sunday night the merged bank will be a “powerhouse of the Midwest.”
“We will be a top regional bank, with the scale to compete and the passion to serve,” Torgow said. “Merging with the Huntington platform will be a great benefit to all of our stakeholders and will drive significant opportunities for our team members.”
Where are the stocks trading?
TCF Financial Corp.’s stock closed at $34.78 a share on Friday, down 89 cents or 2.5%.
TCF Financial’s stock price has nearly doubled in value since March 18 as the COVID-19 panic hit Wall Street in the spring. TCF closed at $18.35 a share on March 18.
TCF Financial closed at $46.80 a share on Dec. 31, 2019.
Huntington’s stock closed at $12.93 a share on Friday, down 10 cents or 0.77%. Like other bank stocks, Huntington has seen a sizable run-up in share price since its March 23 low of $7 a share.
Huntington’s stock remains down from late 2019 when the stock closed at $15.08 a share.
What happens to the TCF Center?
TCF is perhaps best known these days for its connections to the presidential election and the pandemic.
After the merger, “it will become the Huntington Center,” Torgow said Sunday.
The TCF Center, formerly the known as Cobo Center, is the state’s largest convention center and the spot where Detroit hosted its annual auto show for years.
The TCF Center received national publicity in 2020 when supporters of President Donald Trump made unproven claims of fraudulent vote counting when absentee ballots were processed there. The allegations were rejected by Michigan judges, election experts and Detroit officials.
The center also made headlines this past spring in Detroit when it was transformed into a 1,000-bed field hospital to treat coronavirus patients by April 8.
What happens to TCF Tower?
Construction began in the fall of 2019 on the TCF Tower, a 20-story headquarters for TCF, on Woodward Avenue within the Grand Circus Park Historic District in the heart of the city’s entertainment district.
The new TCF headquarters was to create 200 new jobs and bring another 300 workers to downtown Detroit, according to the website of Neumann/Smith Architecture, designers of the project.
The tower, according to the designers, “will include ground-level commercial space, 10 stories of parking, workplace environments across nine stories, and a rooftop terrace. TCF will occupy the top floors, while the remainder will be available for expansion, or to other tenants.”
Huntington has plans to occupy the full building now and may have up to 1,100 employees there, Steinour said Sunday.
Plans for the construction continue, with the opening expected in the next 16 months or so. The new name: The Huntington Tower.