Two major companies holding the bank with high profile in Michigan – Columbus, Ohio-based Huntington Bankers and Detroit – have announced plans to merge all of the shares worth $ 22 billion.
The deal is expected to close in the second quarter, according to a press briefing that took place Sunday night with the Detroit Free Press.
The Huntington trademark will remain, and the TCF name will disappear. A merger would mean that another bank based only in Michigan would lose its identity. Several of the major banks in Michigan – Chase, Comerica, BNC, Bank of America, and Fifth – are located in other states. Flagstar Bank is headquartered in Troy, and Ally Financial, a banking holding company, is headquartered in Detroit.
However, the recent merger calls for the retention of headquarters for various operations in a unique commitment to Detroit and Michigan.
Huntington Bancshares will maintain its headquarters in Columbus for the holding and retail banking operations.
The Detroit headquarters will be used for the combined company’s commercial banking arm. Bankers said 60% of the loan portfolio business will be based in Detroit, while 40% will be in Columbus.
“Detroit will be co-headquarters with Columbus,” said Stephen de Steinor, Huntington’s chief executive.
“It has to be a win for Michigan and Ohio,” he said Sunday night. He said the agreement came quickly after the talks began at the end of October.
“This should have been a win for everyone or it just wouldn’t have been worth doing. This is not some kind of wink and nod. This is an important commitment for Detroit and Michigan.”
Steinor indicated that every other board meeting will be in Detroit and will have an office in Detroit, as well as in Columbus.
At least 800 employees of the combined company, nearly three times the number planned by TCF, will be housed in a new office tower that will open in the future in downtown Detroit.
The major banking news comes nearly two years after TCF Financial, which was based in Wisata, Minnesota, and Chemical Bank of Michigan announced a $ 3.6 billion deal. Chemical Bank had a long history in the Midland, but moved its headquarters to Detroit in July 2018. This merger created the nation’s 27th largest and largest such institution with its headquarters in Detroit.
The Huntington-TCF deal, subject to shareholder and regulator approval, would create a regional bank that would rank among the top 10 in the country. The combined company will have nearly $ 168 billion in assets, $ 117 billion in loans and $ 134 billion in deposits.
While Huntington’s campuses can be easily spotted across Michigan – Huntington had 281 branches in Michigan as of early September – TCF has its name at the largest convention center in the state. TCF has also announced plans to build an impressive 20-story office tower in downtown Detroit.
The questions raised in Michigan include a lot about what would happen to the various bank branches, as well as what is next to Detroit’s major milestones and development.
In September, Huntington announced a five-year $ 5 billion commitment to give Michigan’s economy a much-needed boost to help small businesses, minority-owned businesses, homeowners, and more.
TCF also recently announced a $ 1 billion commitment over five years to support small minority-owned and women-owned businesses, which will be added to Huntington’s commitment.
On Sunday, Huntington said it will contribute $ 50 million to the Donor Fund at the Community Foundation of Southeast Michigan to meet the needs of communities in Detroit and via the joint bank’s presence. The fund recommended by the donors will be added to the commitments previously made by both banks.
What about jobs?
Mergers and acquisitions are designed to grow a company but also involve ways to reduce costs, including closing departments or overlapping branches in some neighborhoods and communities.
Bank mergers have slowed during the economic uncertainty that arose in 2020 after the recession caused by the Coronavirus. But bankers and others are becoming more optimistic about the health of the economy given the expected widespread spread of COVID-19 vaccines in 2021.
“Both banks feel a recovery is about to happen,” Steinor said.
The merger is expected to generate estimated cost savings of $ 490 million or 37% of non-interest-related TCF expenses, 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 does business in all 50 states and Canada with specialist lending and leasing businesses.
Huntington has a network of 839 full-service branches, including 11 Special Client Group offices, and 1,330 ATMs across Ohio, Illinois, Indiana, Kentucky, Michigan, Pennsylvania and West Virginia.
According to the sources, the combined company will maintain its market leadership position with the largest branch share and second place in consumer deposits in the markets in which it operates. Huntington’s footprint will expand to Minnesota, Colorado, Wisconsin and South Dakota, and Huntington will further expand its presence in Chicago.
No job cuts plans were detailed in a phone briefing with Free Press Sunday evening. But bankers said there was some overlap at branches and that mergers would take place.
“We have some branches where we are on one corner and TCF in another,” Steinor said. “So there will be some integration for sure.”
Who will be responsible?
Steinor, Chairman of Huntington, will remain the Chairman, President and CEO of the Holding Company, the CEO and President of the bank after the merger is completed.
“We look forward to welcoming members of the TCF team. Together we will have a stronger and more capable company to support our customers and drive economic growth in the communities we serve,” Steinor said in a statement.
On Sunday, Steinor said Huntington is focusing on investing in technology and making digital investments.
Gary Torgo, CEO of TCF Financial, will be the Chairman of the Bank’s Board of Directors.
Turgo said the partnership “will provide us with the opportunity for deeper investments in our communities,” as well as more jobs in Detroit. He said Sunday night that the combined bank would be “a force from the Midwest.”
“We will be one of the major regional banks, with the volume of competition and the passion for service,” said Turgo. “The integration with the Huntington platform will be very beneficial to all of our contributors and provide great opportunities for our team members.”
Where are stocks traded?
TCF Financial Corp 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 18th.
TCF Financial closed at $ 46.80 a share on Dec 31, 2019.
Huntington shares closed at $ 12.93 a share on Friday, down 10 cents, or 0.77%. Like other bank stocks, Huntington has seen the share price soar since it fell on March 23 at $ 7 a share.
Huntington stock has been down since late 2019 when the stock closed at $ 15.08 a share.
What happens to the TCF?
These days TCF is perhaps best known for its connections to the presidential election and the pandemic.
“It will become the Huntington Center,” Torgo said on Sunday after the merger.
The TCF, formerly known as the Cobo Center, is the state’s largest convention center and the venue where Detroit has hosted its annual auto show for years.
The TCF received national publicity in 2020 when supporters of President Donald Trump made unproven allegations of fraudulent vote counting when absentee ballots were processed there. Judges, election experts and Detroit officials dismissed the allegations.
The center also grabbed headlines last spring in Detroit when it was converted into a 1,000-bed field hospital to treat coronavirus patients by April 8.
What happens to the TCF tower?
Construction started in the fall of 2019 on TCF Tower, TCF headquarters are 20 stories high, 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 Neumann / Smith Architecture, the project’s designers.
The tower will include, according to the designers, “commercial space at ground level, 10 floors of parking, workplace environments across nine floors, and a roof terrace. TCF will occupy the upper floors, while the remainder will be available for expansion, or to other tenants.”
Steinor said Sunday that Huntington has plans to fully occupy the building now and could have up to 1,100 employees.
Building plans are ongoing, with the opening expected in the next 16 months or so. New name: Huntington Tower.