Chemical Bank to relocate headquarters to Detroit
Detroit — The state's largest headquartered bank is moving its home base to Detroit's downtown, bringing with it a promise of philanthropic support for the neighborhoods while filling a retail banking void created by Comerica's departure nearly a decade ago.
Midland-based Chemical Financial Corp. is immediately relocating its headquarters to the city and will eventually move into a 20-story building to be constructed at the corner of Woodward and Elizabeth.
"This is a great moment for our company and a wonderful opportunity for Chemical Bank to bring jobs, increase commitment and bring banking services to the citizens and the businesses of Detroit, and to everyone throughout the region," Chemical Bank Chairman Gary Torgow said Wednesday. "We love Detroit and are thrilled to be here."
Mayor Mike Duggan and Gary Torgow, chairman of Chemical Bank, announce the bank's new headquarters in downtown Detroit on Wednesday, July 25, 2018. Max Ortiz, The Detroit News
Chemical enters a retail banking void in Detroit since Comerica Bank, which traces its Detroit roots back to 1849, moved its headquarters to Dallas, Texas, in 2007, leaving Ally Financial as the only major bank still based in the city. And last month, Wells Fargo Bank said it was exiting retail banking operations in Indiana, Michigan and Ohio, selling its 52 locations to Flagstar Bancorp Inc.
Chemical's move provides the city the chance to raise its profile in the industry and among large businesses, said Terry McEvoy, managing director at Stephens financial services who covers Midwest regional banks.
“The exit of Comerica years ago combined with the resurgence in Detroit’s economy, it makes sense for a regional bank to be headquartered in that market,” McEvoy said. “Chemical Bank is publicly traded. This wasn’t just a headline. The board and management team saw a legitimate opportunity for growth in a profitable economy and wanted to be a part of that.”
Chemical's shares rose 1.65 percent to $57.16 Wednesday following the news.
Mayor Mike Duggan said "I never thought I'd see the day" when the city would land a major regional bank, which is expected to bring 500 jobs.
"You can't understate the importance of having a bank headquartered in your town," Duggan said, noting Chemical already is committed to home mortgages and he believes the bank will provide summer job and internship access to Detroit students to expose them to the financial sector.
Torgow said Chemical Bank's plan for the new building is currently in the design phase, and officials hope construction will begin later this year. The mixed-use development, which could cost around $60 million, is slated to be about 400,000 square feet and include retail, office space, parking and luxury condominiums, he said.
Chemical Bank has rights to the lot and a separate building behind owned by a New York conglomerate, Torgow said. It's unclear at this time, he said, if the new building will also include affordable units for Detroiters.
In the meantime, Chemical has office space at 333 W. Fort, and Torgow said it will slowly be bringing employees over to merge there. About 100 employees are already working in Detroit.
The bank plans to retain its Midland workforce of more than 500 and its presence in that community as it expands into Detroit. Midland will continue to be the home of the bank's corporate operations center, company officials said.
Tom Shafer, Chemical Bank president and CEO, said the company staff in Midland represents a significant portion of the bank's operational infrastructure and loan operations.
The company last month announced its Midland offices are relocating from a site near Dow Chemical to a space two city blocks away in Midland's downtown.
“It’s our intention that we’re going to leave all of those divisions in place. There’s no reason for them to move,” he said. “Our commitment to Midland is significant and relationships are deep.”
Midland City Manager Brad Kaye said the city is disappointed to lose the bank’s headquarters and hopes to learn more soon about the potential impact it will have on the city’s tax base.
“At the end of the day, we’re disappointed to be losing the corporate headquarters,” said Kaye, adding the city understands the bank’s desire to expand in the Midwest and that they have “deemed Detroit to be a better locale to do that from.”
Kaye said that it’s “too early to tell” how the move will impact the city financially. “That conversation still has to take place,” he said.
Most of the bank's executive leadership is based in Troy and it has other employees scattered through southeast Michigan at various offices. Some of those will be consolidated in Detroit's downtown. The company also expects to add neighborhood bank branches in the city. Locations are still being determined, Shafer said.
The job estimates don't factor in the number of temporary workers who will be hired for construction, officials said.
Shafer confirmed Wednesday the bank will not be seeking incentives or abatements from the city associated with the project.
“We’ve asked for no incentives for the move to Detroit," he said. "We don’t expect any, and we’re doing this because we think that there’s greater opportunity for growth in the marketplace to support what we believe is a great economic comeback story in our state."
Wednesday's announcement comes as Detroit Wednesday morning said it has named Chemical Bank its new primary banking partner for management of the city's operating deposit accounts, which have anticipated balances of up to $500 million in deposits.
While Chemical benefits from that partnership, Jerry Davis, the associate of dean for business and impact at the University of Michigan's Ross School of Business, said the city stands to benefit, too. Traditionally, regional banks are leaders in philanthropic work.
"They're a convening point for businessmen," Davis said. "A bank's board usually consist of all the local CEOs, and that enhances their ability to coordinate their actions to raise money for the art institute or get Amazon to locate here.
"It's possible that a move like this could rekindle that tradition because the bank is more accountable to the local community than New York or Charlotte or San Francisco (where national banks reside)."
Torgow said the company already has committed $5 million to a new Detroit neighborhood initiative and offers special lending programs in the city for small businesses and residents.
City Council President Brenda Jones got emotional Wednesday as she addressed the company's commitment, saying it's "exciting and inspiring," and its long-term investment "truly marks a critical point."
"Gary grew up in the city of Detroit," she said. "I know the community is going to be in good hands."
Wendell Anthony, the long-time president of Detroit's NAACP Detroit branch, said he's known Torgow for decades and believes the bank will keep the needs of those in the neighborhoods in mind.
"Gary and the bank understands community," he said. "We don't have two Detroits. We have one Detroit."
Troy-based Talmer Bancorp Inc. merged with Chemical Financial in 2016 in a $1.7 billion transaction and Torgow became its chairman. The move made the banking company the largest headquartered and operating branch offices in Michigan. As of June 30, the corporation had $20 billion in assets, about 3,300 employees and 212 banking centers across Michigan, Ohio and Indiana, officials said.
Kaye said the prior merger with Talmer “set these wheels in motion” for the move. The bank at that time, he said, had indicated the headquarters would stay in Midland.
“We certainly suspected this might be the outcome of the merger two years ago,” he said.
The bank is the fourth largest employer for Midland, a city of about 43,000 that’s also home to Dow Chemical.
The company's commitment to the city comes amid other major investments in recent years.
In October, a $160 million facility, Flex-N-Gate Detroit, is expected to open on Georgia Street, not far from the Coleman A. Young International Airport. The auto parts plant on the east side is expected to hire more than 400 workers.
Separately, India-based auto supplier Sakthi Automotive Group has invested in a multi-million-dollar manufacturing facility on Fort Street in southwest Detroit.
Auto seating supplier Adient recently announced it intended to move its global headquarters and hundreds of jobs to Detroit but scrapped the plan last month.
The company purchased a downtown facility in 2016 for its 500 executive and leadership employees, including 100 proposed new jobs.
The company, which has struggled in recent years to maintain profitability, scrapped the plan weeks after getting a new CEO, saying the decision wasn't a reflection on Detroit or its revitalization efforts.