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TCF Financial (TCF) Completes Merger With Chemical Financial

Zacks Equity Research

TCF Financial Corporation TCF has concluded an all-stock deal to acquire Chemical Financial Corporation, announced in January 2019. The combined company has $47 billion in assets, $35 billion in total deposits, more than 500 branches across nine states along with a top 10 deposit market share in the Midwest.

Craig R. Dahl, TCF’s president and chief executive officer said, “With complementary banking platforms and the additional scale created through the merger, we are uniquely positioned to provide a more robust product set to a broader customer base with limited overlap and disruption.”

Per the agreement, legacy TCF Financial was merged into Chemical Financial, with the latter being the surviving company. Also, as decided at the time of announcement, Chemical Financial was renamed as TCF Financial.

Further, upon closing of the transaction, each share of legacy TCF Financial was converted into 0.5081 common shares of the merged company, and each common share of Chemical Financial is now a common share of the new entity.  

Also, TCF Financial and Chemical Financial shareholders own 54% and 46% of the combined company, respectively, on a fully diluted basis. The combined company’s board of directors will have 16 directors — eight from TCF Financial and Chemical Financial each.

Earlier this year, the companies had disclosed financial benefits that are expected from this deal. The merger is expected to be 17% and 31% accretive to earnings per share of Chemical Financial and TCF Financial, respectively, by 2020.

The transaction is also expected to generate approximately $180 million in annual run-rate cost synergies by 2020, with minimal reduction in branches.

Both the companies consider smooth customer experience a priority. Thus, initially, TCF Bank will operate under both the TCF and Chemical Bank brands. The company expects to combine its banking technology platforms by the middle of 2020 without any disruption to customers.

Our Take

The latest acquisition is likely to support TCF Financial’s prospects. Notably, restructuring efforts help it reallocate capital in core markets served. The company’s investments in technology in order to improve customer experience should bode well in the long term. 

Shares of TCF Financial have gained 9.6% so far this year compared with 11.6% growth of the industry it belongs to.

Currently, TCF Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

First Business Financial Services FBIZ has witnessed 7.5% upward estimate revision over the past 30 days. The company’s shares have risen nearly 20% so far this year. It flaunts a Zacks Rank #1 at present.

Eagle Bancorp Montana, Inc. EBMT shares have rallied 6.4% so far this year. Further, the company’s earnings estimates for the ongoing year have moved 9.5% north in the past 30 days. The stock currently sports a Zacks Rank of 1.

MidWestOne Financial Group, Inc. MOFG has witnessed 3.4% upward estimate revision over the past 30 days. The company’s shares have risen nearly 20% so far this year. It flaunts a Zacks Rank #1 at present.

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