TCF, Chemical merging to create $45 billion bank

Wayzata, Minn.-based TCF Financial would merge into Detroit-based Chemical Financial in an all-stock deal worth $3.6 billion.

Michigan’s Chemical Financial announced a planned merger with Minnesota’s TCF Financial which would create a $45 billion regional financial powerhouse.

Wayzata-based TCF would merge into Detroit-based Chemical under the all-stock deal worth $3.6 billion.

Operating as TCF, the combined bank would be headquartered in Detroit and would have $34 billion in total deposits. The company will have more than 500 branches across nine states, including four of the top 10 Midwest markets, and will maintain “a significant operating presence” in Minneapolis as well as Chicago and Chemical’s former headquarters site of Midland, Mich.

After the deal closes in the second half of the year, the 16-member board will be evenly split between TCF and Chemical directors. Executive leadership of the combined company will be:

  • Chemical Chair Gary Torgow will serve as executive chairman
  • Vance Opperman, who is the current lead independent director of TCF Financial’s board of directors, will serve as lead independent director
  • TCF Chair, CEO and President Craig Dahl will serve as CEO and president
  • Chemical EVP/CFO Dennis Klaeser will serve as CFO
  • TCF CFO and Deputy Treasurer Brian Maass will serve as deputy CFO and treasurer

“We are confident that this merger will enhance our ability to deliver stronger and more sustainable growth and greater value creation than either company could achieve alone” Dahl said. “The new TCF will have attractive positions in both its product suite and market footprint as well as a more diversified loan portfolio and increased lending capabilities across asset classes, geographies and industry verticals.”

Chemical Financial President/CEO David Provost will be chair of the combined bank, and Chemical Bank President/CEO Tom Shafer will become president and COO.

“With a shared strategic vision and increased scale and capabilities, our two complementary banking platforms will be positioned to better serve our customers and communities,” said Chemical’s Chair Gary Torgow. “The combination of TCF and Chemical creates the largest midcap bank in the Midwest, poised to deliver double-digit EPS accretion for each set of shareholders, significant cost synergies, top-tier return metrics, a more diversified balance sheet and a lower risk profile.”

The deal would create a more diversified deposit base and greater potential for loan growth, the company said. Complementary business lines —TCF’s national lending verticals, Chemical’s more localized commercial lending and wealth management — poise the combined bank to “broaden the opportunities to drive sustainable growth and increase market share.”

Most recently, the $21.5 billion Chemical acquired Troy, Mich.-based Talmer Bancorp in 2016 in a deal which put the bank at $16 billion in assets. In total, Chemical has made six acquisitions since 2010. It currently has 212 branches primarily in Michigan, northeast Ohio and northern Indiana. The TCF deal is Chemical’s first acquisition outside of the state.

Much less of a deal-maker the $23.7 billion TCF recently drew the ire of the Consumer Financial Protection bureau over allegations it manipulated customers into enrolling in overdraft protection programs.

The transaction is projected to deliver 17 percent EPS accretion to Chemical and 31 percent EPS accretion to TCF by 2020, with a tangible book value earn-back period of 2.7 years.

Keefe, Bruyette & Woods is acting as financial advisor to, and rendered a fairness opinion to the board of directors of, Chemical. Nelson Mullins Riley & Scarborough, LLP and Wachtell, Lipton, Rosen & Katz are serving as legal counsel to Chemical.

J.P. Morgan Securities LLC is acting as lead financial advisor to, and rendered a fairness opinion to the board of directors of, TCF. Perkins Advisors, LLC is also acting as financial advisor to TCF, and Simpson Thacher & Bartlett LLP is serving as legal counsel.