Banking

Huntington agrees to buy TCF Financial

Huntington Bancshares in Columbus, Ohio, has agreed to buy TCF Financial in Detroit in a move that would accelerate the pace of regional bank consolidation.

The Midwestern companies unveiled the deal, which would create a company with a market value of $22 billion, late Sunday after The Wall Street Journal and other news outlets reported an announcement was imminent.

“This merger combines the best of both companies and provides the scale and resources to drive increased long-term shareholder value,” Stephen Steinour, who will remain Huntington’s chairman and CEO when the deal closes, said in a press release. “Huntington is focused on accelerating digital investments to further enhance our … customer experience.”

The combined company would have $168 billion in assets, putting it in the neighborhood of big regionals like KeyCorp in Cleveland and Citizens Financial Group in Providence, R.I. Huntington has $120 billion of assets.

While the companies did not immediately disclose the price Huntington would pay in the all-stock transaction, it would likely be among the four biggest bank deals announced this year.

The other large deals include South State’s merger with CenterState Bank, First Citizens BancShares’ proposed purchase of CIT Group, and PNC Financial Services Group’s planned acquisition of BBVA Compass Bancshares.

Huntington, which would retain its name, would have $134 billion in deposits after the deal closes. The companies have a total of 1,312 branches, with the biggest overlap in Michigan. Huntington said in the release that the acquisition would provide it with an entrée into Minnesota, Colorado, Wisconsin and South Dakota and expand its market share in Chicago.

The merger is expected to close in the second quarter.

TCF, in an explainer of the deal on its website, said its branches would continue to operate under the TCF brand until a systems integration occurs later in 2021.

Gary Torgow, TCF’s chairman, would keep that title at Huntington.

“We will be a top regional bank, with the scale to compete and the passion to serve,” Torgow said in the release.

Columbus would serve as the headquarters for Huntington and the consumer banking unit, while the commercial bank would be based in Detroit.

Huntington said it expects the merger will be 18% accretive to its 2022 earnings per share. It plans to cut $490 million in annual expenses, or roughly 37% of TCF’s operating costs.

TCF’s sale continues a recurring narrative for David Provost, who became TCF’s CEO in October with the unexpected retirement of Craig Dahl.

Provost sold Talmer Bancorp to Chemical Financial in 2016. He became Chemical’s CEO in late 2018 after his predecessor’s sudden departure, then announced a merger with TCF in January 2019.

TCF had spent the last two months reviewing ways to add revenue, including an expansion of commercial lending around Minneapolis and Chicago, and cut costs. Executives had also been reviewing the branch network, which includes more than 500 locations.

TCF’s assets fell by 2.1% between March 31 and Sept. 30, to $45.8 billion. The third-quarter amount included $1.8 billion in loans originated under the Paycheck Protection Program. Deposits rose by 9%, to $39.2 billion.

Goldman Sachs and Wachtell, Lipton, Rosen & Katz advised Huntington. Keefe, Bruyette & Woods and Simpson, Thacher & Bartlett advised TCF.



 

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