The announced merger between Columbus, Ohio-based Huntington Bancshares Inc. and TCF Financial Corp. may create opportunities for community banks to gain customers and employees from the disruption.

With overlapping markets, management said they plan to close branches in close geographic proximity. Given existing footprints, the closures are expected to be concentrated in Michigan and Ohio.

Even banks that operate in areas where the two banks do not have overlapping branches could take advantage of deal fallout. D.A. Davidson analyst Jeff Rulis pointed to Saint Louis Park, Minn.-based Bridgewater Bancshares Inc., a community bank with $2.77 billion in total assets, as benefitting from the merger displacement.

"The bank's history of capitalizing on dislocation suggests a double-digit organic growth path can be sustained," wrote Rulis in a note. Rulis referred to "market chaos" in the Minneapolis-St. Paul area as "a seemingly never-ending gift."

While Huntington does not have a presence in Minneapolis, some customers might be concerned about the change the deal brings. TCF has developed a well-known brand in the Minneapolis area that will be lost once the conversion is closed, said Mary Jayne Crocker, COO at Bridgewater, in an interview. "It is 'Twin Cities Financial,'" she said. "Huntington is a completely unfamiliar name to the people here."

Bridgewater expects to use its local leadership and knowledge to provide better banking options to local business clients, Crocker said. Smaller banks can be more nimble, a trait recently demonstrated with the Paycheck Protection Program, she said.

"It was a huge opportunity for us to gain market share away from some of these larger banks that couldn't get it done as quickly as we could," she said.

In addition to the chance to win customers, Bridgewater may be able to gain new employees from the merger, Crocker said. "We've been successful in taking teams out of other banks as acquisitions happen and then diversifying our loan portfolio based on the experience of those lenders," she said. "So we would certainly look to do something like that again."

Opportunities could be even greater in areas with significant overlap. Mergers always present openings to competing banks, and the Michigan market could be especially ripe considering Huntington's and TCF's footprints, said David Konrad, a Midwest bank analyst at D.A. Davidson, in an interview.

TCF alone has accounted for a couple of large mergers in the state in recent years. In 2016, there was a merger between Detroit-based Chemical Financial Corp. and Troy-based Talmer Bank and Trust, and then Chemical and TCF completed a merger of equals in 2019.

Larger community banks in the state have also scaled themselves through M&A. Sparta, Mich.-based ChoiceOne Financial Services Inc. completed its acquisition of Community Shores Bank Corp. on July 1, resulting in a 213-basis-point increase in the bank's deposit market share that gave it the sixth-highest deposit market share among community banks in the state. In Ohio, another market where Huntington and TCF have branch overlap, Defiance, Ohio-based Premier Financial Corp. increased its deposit market share 360 basis points year over year. It acquired Youngstown, Ohio-based United Community Financial Corp. in a deal that closed Jan. 31.

Community banks in Michigan hold 20.49% of deposit market share in the state, while community banks in Ohio hold 26.80%. The market share analysis caps deposits at $1 billion per branch.