For most folks in Detroit, they will probably never know that TCF stands for Twin Cities Federal, an old thrift institution with its roots in Minnesota. Or that TCF nearly failed in the mid-‘80s, before being resuscitated and rebuilt into a formidable operation by a disciplined and creative CEO with roots in Michigan’s banking community (and, coincidentally, with a tinge of poetic irony, this gentleman, Bill Cooper, was once a Detroit city cop before putting himself through night accounting classes to lay the foundation for his successful banking career). For many, TCF will just be another banking acronym in an industry already littered with seemingly millions of them. And candidly, while the Chemical name will soon join a long and distinguished rollcall of Michigan-based bank names that have disappeared over the years, the headquarters for the combined company will actually stay here in the city of Detroit.  So, quite honestly, they can retire the name. I’ll take the headquarters six days of the week and twice on Sunday.

It was nearly a quarter century ago that Michigan’s once-largest and highly regarded NBD (yes, another acronym; this time representing the regal National Bank of Detroit), ceased to exist in a series of mergers that today resulted in J.P. Morgan Chase.  Soon a new “acronym” will move front-and-center as Michigan’s largest bank, with its headquarters also residing in Detroit. TCF. Both, coincidentally, stood or stand at approximately $45 billion of total assets in their time. NBD seemingly a bastion of the old Detroit and its automotive might. TCF now hopefully representing another powerful symbol of the continued revitalization of the new Detroit, and its emerging technological prowess.  To the leadership teams of Chemical and TCF, I say “Well done.” And let’s keep moving forward.

There is a proud and successful history of MOEs in Michigan’s banking annals.  There’s another acronym: MOE. Merger of Equals. It is when two comparable-sized banking organizations agree to join forces, carefully navigating the multitude of potential landmines and possible socially awkward traps that can quickly and easily derail such an undertaking. The thesis of such a combination largely rests on the premise that, if executed properly and attendant egos are appropriately checked at the door, then “1 + 1” could and should ideally add up to “3”.

Within the past few decades, you’ve had the old Sparta State Bank combining with Valley Ridge Bank to form what is today ChoiceOne Bank over on the west side. In one of the better-known and higher-profile MOEs in the industry, Detroit-based neighbors Comerica Bank and Manufacturers National Bank linked in the early ‘90s, retaining the Comerica name within Manufacturers’ old blue trapezoid. However, it would be less than 15 years later that Comerica would relocate its headquarters to Dallas, effectively cementing the emerging void that started with NBD’s disappearance in the late ‘90s, of a prominent, Detroit-based bank operating its command center in the state’s largest city. More than five years ago, Mercantile Bank in Grand Rapids, leveraged its strong asset-generating capabilities with the solid funding source and pristine balance sheet of Alma-based Firstbank. That combination, retaining the Mercantile name and the Grand Rapids address, is today the third largest bank headquartered in Michigan, with more than $3 billion in assets.  Truly “1 + 1” did ultimately become “3”. Just a few years ago the old Capac State Bank and Lapeer County Bank & Trust decided that walking down the aisle on the state’s east side behooved all critical constituencies of both organizations, and soon re-branded the marriage under the Lakestone Bank moniker while firmly establishing the headquarters in Lapeer. And, to a certain extent, the precursor to today’s TCF involved the quasi-MOE of Chemical Bank and Talmer Bank back in 2016. At the time, Chemical’s growth initiatives witnessed it rapidly propelling toward $10 billion in consolidated assets, so Talmer represented an opportunity to quickly add significant scale (nearly $7 billion at the time) to enable Chemical to cross a material (and more costly) banking industry operating threshold in a meaningful way.

And remember, Talmer Bank itself was “formed” a little over 10 years ago, starting as the $100 million First Michigan Bank in Troy. Both opportunistic and financially well-heeled via significant outside investment, the organization capitalized on fallout from the Crisis by acquiring banks, re-branding to Talmer in 2011, going public in 2014, (to attain a more liquid currency to help facilitate its ambitions), merging with Chemical in 2016, and then just last week announcing its blockbuster MOE with TCF. For those keeping score:  the old Talmer / new Chemical was approximately $100 million in 2007, nearly $7 billion by 2016, and more than $21 billion today.  The new TCF (which I have tongue-in-cheek tagged as Talmer & Chemical Forever) will measure roughly $45 billion sometime later this year. More importantly, the executive team and board governance that has adroitly guided the creation of this powerful regional player, will reside in Detroit. The benefits to the city, both economically and emotionally, cannot be understated.

I cannot help but envision an imaginary note of gratitude being penned by a former legend in Michigan’s (and particularly Detroit’s), banking lore. An icon that has long since passed, quietly sitting at a large mahogany desk, sharply dressed in a crisp three-piece suit with an expertly knotted silk tie.  As was his custom, scripting the written word both eloquently and passionately, yet succinctly, while expressing his appreciation to not only the leadership of the new TCF for bringing a prominent banking organization back to the city of Detroit, but also to the bankers that will once again walk the Woodward Avenue corridor and embody the continued revitalization of this city. And I envision that this note of gratitude would be concluded, respectfully, with a simple and prescient notation:

Thanks, Chick Fisher”

In closing, attached please find our monthly summary of Michigan’s financial institutions. As you and your Board take your organization forward, please do not hesitate to reach out to me and/or my colleagues at ProBank Austin if we can be of any assistance in helping you assess the competitive landscape. I look forward to re-connecting with all of you as 2019 unfolds.

 

FEBRUARY 2019 REVISED MICHIGAN BANKING SUMMARY

 

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