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Chemical Financial, TCF Financial plan $3.6 billion ‘merger of equals’

BY Monday, January 28, 2019 11:50am

Chemical Financial Corp. would extend further across the Midwest with the proposed merger with Wayzata, Minn.-based TCF Financial Corp.

The two banks this morning announced they signed a definitive agreement for a merger that would create a bank with $45 billion in assets with 526 branch locations in nine states and $34 billion in deposits.

A rendering shows a proposed 20-story tower in Detroit where Chemical Bank plans to move its corporate headquarters and hire 500 people. COURTESY RENDERING

Under the $3.6 billion all-stock deal, TCF Financial would merge into the Detroit-based Chemical Financial. Once the deal closes, Chemical Bank locations would take on the TCF name.

Executives billed the so-called “merger of equals” as accelerating growth and leveraging the strengths of both banks while generating about $180 million in cost savings.

“It substantially enhances our competitive position, creating a combined top-10 market leader in the Midwest,” said Chemical Financial President and CEO David Provost, who will become chairman of the merged bank. “Together we have the scale and profitability that enhances our ability to compete and win in today’s fast-moving and continuously evolving banking industry.”

Executives expect the deal to close late in the third quarter or early in the fourth quarter of 2019, pending shareholder and regulatory approvals.

TCF Financial (NYSE: TCF) has 314 bank offices in Michigan, Illinois, Minnesota, Colorado, Wisconsin, Arizona and South Dakota with $23.7 billion in total assets. The bank lacks a West Michigan office footprint, although it has a number of ATMs in the market.

Chemical Financial (Nasdaq: CHCF), which relocated its corporate headquarters last year from Midland to Detroit,  has 212 banking offices, primarily in Michigan, plus northeast Ohio and northern Indiana, with $21.5 billion in assets. Chemical also is the largest bank headquartered in Michigan. Other banks operating in the state are larger, but are based elsewhere.

According to FDIC data, Chemical Bank is one of the largest banks in the West Michigan market, ranking fourth in deposit market share in 2018 in the Grand Rapids metropolitan statistical area with $1.94 billion in deposits through 32 offices as of June 30, 2018.

Statewide, Chemical Bank ranked seventh in deposit market share in the 2018 FDIC Summary of Deposits with $13.1 billion and 196 offices.

Just prior to this morning’s merger announcement, Chemical Financial reported higher net income of $73 million, or $1.01 per diluted share, for the fourth quarter, versus $70.4 million, or 98 cents per diluted share, in the same period a year earlier.

Editor's Note: This story has been updated from a previous version. 

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