Why Huntington Bancshares And TCF Financial Are Merging In $22 Billion Deal

By Amit Chowdhry ● Dec 14, 2020
  • Huntington Bancshares (Nasdaq: HBAN) and TCF Financial Corporation (Nasdaq: TCF) announced a definitive agreement under which the companies will combine in a deal valued at $22 billion.

The Huntington National Bank parent company Huntington Bancshares Incorporated (Nasdaq: HBAN) and TCF National Bank parent company TCF Financial Corporation (Nasdaq: TCF) announced the signing of a definitive agreement under which the companies will combine in an all-stock merger with a total market value of about $22 billion. This deal will create a top 10 U.S. regional bank with dual headquarters in Detroit, Michigan and Columbus, Ohio.

The combined company is going to bring together two purpose-driven organizations with a deep commitment to the customers and communities they serve. And with a rich history of caring for customers and colleagues, the new organization will have a top 5 rank in approximately 70% of its deposit markets and will utilize its scale to serve customer needs through a distinctive “People-First, Digitally-Powered” customer experience. 

Under the terms of the deal — which was unanimously approved by the boards of directors of both companies — TCF will merge into Huntington and the combined holding company and bank will operate under the Huntington name and brand following the closing of the transaction. Upon the closing of the deal, Stephen D. Steinour will remain the chairman, president, and CEO of the holding company and CEO and president of the bank. And Gary Torgow will serve as chairman of the bank’s board of directors.

The headquarters for the Commercial Bank will be in Detroit where at least 800 employees of the combined company, nearly 3x the number TCF had planned — will be housed in the downtown structure. And Columbus will remain the headquarters for the holding company and the Consumer Bank.

The pro forma combined company will have about $168 billion in assets, $117 billion in loans, and $134 billion in deposits. And the combined organization will significantly improve Huntington’s market position, increase scale and provide greater revenue growth opportunities. The company is expected to extend its top quartile financial metrics after the completion of the integration.

Huntington is expecting the financially compelling transaction to be 18% accretive to earnings per share in 2022, assuming the fully phased-in transaction cost synergies. And the merger uniquely positions the combined organization to capitalize on market opportunities and broaden the channels and customers it serves through expanded distribution and product offerings.

The combined company’s expanded distribution and scale are going to position Huntington to serve an expanded customer base through a distinctive customer experience while driving top-quartile financial performance. And the combination is expected to lead to an estimated cost savings of approximately $490 million, or 37% of TCF’s noninterest expense.

The combined company will maintain its leading market position with the largest branch share and the second position in Consumer Deposits in the footprint. And the combination expands the Huntington footprint to include Minnesota, Colorado, Wisconsin, and South Dakota and deepens its presence in Chicago.

Huntington is going to 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. And this donor-advised fund will be in addition to commitments already made by both banks, including a combined $10 million to Detroit’s Strategic Neighborhood Fund. 

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. 

At the closing, 5 current TCF Directors will be added to the Board of Directors of the holding company. And David L. Porteous will serve as Lead Director of the holding company’s Board of Directors and the bank’s Board of Directors. 

The merger is expected to close in Q2 2021, subject to satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by the shareholders of each company. 

KEY QUOTES:

“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 award-winning people-first, digitally-powered customer experience. 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.”

— Stephen D. Steinour, Chairman, President, and CEO of Columbus, Ohio-based Huntington Bancshares

“This partnership will provide us the opportunity for deeper investments in our communities, more jobs in Detroit, an increased commitment in Minneapolis, and a better experience for our customers. We will be a top regional bank, with the scale to compete and the passion to serve. Merging with the Huntington platform will be a great benefit to all of our stakeholders and will drive significant opportunities for our team members.”  

— Gary Torgow, Chairman of TCF Financial Corporation