Best governance around a corporate transaction Huntington Bancshares
Jana Litsey (left) and Lyndsey Sloan, Huntington Bancshares
Huntington Bancshares, undeterred by a pandemic and the demands of getting a major merger approved in a highly regulated industry, in 2020 successfully completed a $6 bn all-stock merger with Detroit, Michigan-based TCF Financial Corporation. The transaction was marked by not only swiftly gaining regulatory green lights but also a focus on the new company’s governance.
Jana Litsey, senior executive vice president and general counsel with Huntington, says the governance feature she is most proud of is the addition of five former TCF directors to the board, bringing it to a total of 18 members. The idea was to draw on the skills, experiences and perspectives of the TCF directors to build a board that could take Huntington into the future.
That included their understanding of the regions and markets in which TCF has historically operated. After just a few meetings they fit in so well it is impossible to tell which are former TCF and which are Huntington board members, Litsey says.
Huntington also adopted an innovative board leadership structure, with its chair and lead independent director remaining in those positions at the combined firm and TCF’s chair taking on the role of chair of The Huntington National Bank, Huntington’s subsidiary.
Similarly, Huntington opted to highlight its support of TCF’s employees and communities by establishing dual headquarters for banking operations in Columbus, Ohio – Huntington’s HQ city, which remains the corporate headquarters for the overall organization and the headquarters of the combined bank’s consumer banking operations – and Detroit, TCF’s HQ city, which became the operational headquarters of the combined bank’s commercial banking operations.
In addition, Huntington introduced a practice of rotating its combined board meetings between Columbus, Detroit and Minneapolis. ‘It’s a thoughtful approach to governance issues,’ Litsey says.
‘This governance structure was carefully designed to ensure that the combined company’s board and governance would draw from the cultures and communities of both Huntington and TCF, while at the same time functioning as a single cohesive integrated organization,’ the company’s award submission states.
Regulatory approval Litsey describes gaining regulatory approval for the merger as ‘a very rigorous process’ involving thousands of pages of documents and fielding hundreds of questions from the Federal Reserve, Office of the Comptroller of the Currency and US Department of Justice.
Huntington, TCF and their advisers recognized early in the merger process that the size of the deal and its impact in the Midwest meant branch divestitures would be required. Huntington and TCF announced the execution of a branch divestiture agreement on the same day the regulatory approvals for the merger were received.
Under the Community Reinvestment Act, federal bank regulators assess each bank’s record of helping to meet the credit needs of its community, including low and moderate-income areas. As such, where Huntington and TCF needed to make bank branch divestments they worked to get financial businesses to acquire the locations with the aim of ensuring those communities continued to have access to those services.
Meanwhile, senior members of Huntington’s and TCF’s management met with community groups across the combined company’s geographic footprint to gather feedback on how those communities could be best served in the future in terms of lending, investments, services and diversity, equity and inclusion programs.
According to the firm's submission, all these efforts paid dividends: Huntington received the highest rating under the Community Reinvestment Act, is making significant investments to revitalize Detroit, Minneapolis and its other markets, and more than 100 community groups wrote letters to the bank regulators encouraging them to approve the merger.
