New Horizons for Memphis’ Oldest Bank

TD Bank’s acquisition of First Horizon signals change and uncertainty in Memphis.

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Seismic change provides an opportunity for a reset. Memphis will certainly be changed when one of the city’s biggest business players, First Horizon, soon has new out-of-town leadership for the first time since its founding in 1864 as First National Bank of Memphis. The last couple of years have seen significant moves in the Memphis banking market, with institutions large and small acquired by bigger organizations: Arkansas-based Simmons Bank snapped up Landmark Community Bank and Triumph Bank last summer, while New Orleans’ Liberty Bank and Trust Company announced their intention to acquire Tri-State Bank. And even within the local level, Memphis’ largest credit union, Orion FCU, said last August it planned to buy Financial Federal.

But the biggest domino fell just three months ago, when First Horizon, the largest Memphis-based bank, announced its impending sale to Canada’s Toronto-Dominion Bank (TD Bank) in a $13.4 billion all-cash deal. With the last of Memphis’ big three legacy banks — Union Planters, National Bank of Commerce, and First Horizon — soon to be under new leadership, there’s plenty of concern that critical jobs and local funding might move out of town once the transaction is complete. And that concern is a tribute to just how big of an impact First Horizon has had on Memphis. It’s a huge organization: As of December 31, 2021, First Horizon operates 412 branches across 12 states, with assets totaling $89.1 billion and some 5,500 employees nationwide.

Local leadership, spearheaded by president and CEO Bryan Jordan, has invested enormous time and resources into many local philanthropic and community organizations. But while it’s still too early to determine how the landscape might change in the future, First Horizon says that TD will continue to be involved in Memphis. “We’re going to be a regional hub for TD,” says Bo Allen, First Horizon’s West Tennessee president, “which means a lot of key jobs will be housed here.”

TD has already committed that it has no plans to close any banking centers and will retain First Horizon’s client-facing bankers (roles that involve direct interaction with client or customer). But after any large acquisition, it’s likely there will be a reduced number of jobs in the long run.

“Bryan Jordan will remain in Memphis as vice chair of TD Bank group. So that’s a big deal for Memphis, and the regional hub, that his passion for the community and the city will remain.” — Bo Allen, First Horizon’s West Tennessee president

“Anytime you lose a headquarters company, one that employs 3,000 local employees, there’s going to be change,” continues Allen. “We probably won’t have as many jobs in Memphis as we do today, but there’s no way to know that right now. But we do know that TD has a fantastic reputation of doing business and operating. They have a great reputation for supporting the community, giving back, and taking care of their employees. And those are really good things for our company and Memphis.”

When headquarters move out of a city, some at-risk positions are those of the back office support staff. With TD senior staff mostly located in the Northeast, similar positions at First Horizon may become redundant. “Positions like chief financial officers or HR directors are usually going to be operating out of headquarters,” says Chris Kelley, director of the Barret School of Banking at Christian Brothers University. “You don’t need two of positions like those. They’ll still need plenty of people to run branches, and officers to deal with clients. But a lot of back office and support staff may no longer be employed in places like the Memphis and Nashville markets.”

Potentially mitigating any negative effects of the acquisition is TD’s commitment to placing a large emphasis on its regional hubs. According to Beth Ardoin, senior executive vice president and chief communications officer at First Horizon, TD runs in a similar manner to First Horizon. “It’s unusual for a bank of its size,” says Ardoin, “but TD operates a very market-centric model. At First Horizon, people like Bo [Allen] are responsible for clients within the market where they live and work. So it’s a continuation of those lasting relationships that we’ve built.”

For customers, Allen says that it will be business as usual after the transaction has closed. First Horizon customers can continue using the same branches they’ve frequented and continue to work with the bankers they’ve built relationships with. TD’s large balance sheet should mean access to larger loans and give branches a greater capacity to lend money on bigger deals. Where Allen thinks the acquisition will truly benefit customers, he says, is on the technology side. “TD has a lot more money to invest in technology, so that we can compete with any bank in the world. It’s a real game changer. That’s people getting money in their account faster, paying bills faster, maximizing their cash. Customers will keep getting better technology, better credit card offers, better mortgage platforms, better online banking.”

Disappointment for some local players, however, might mean opportunity for others. With TD Bank’s American operations headquartered in Cherry Hill, New Jersey, many smaller, local banking institutions can seize advantage. “A lot of people cherish these local relationships,” says Kelley. “And now that leadership is out of town, there’s a percentage of customers who may want to be working with a local bank. And these banks can market to potential new customers, tell them, ‘Hey, we’re here,’ versus somebody making a decision up in the Northeast. ‘We live here, we work here, help us grow, help your business grow.’ So there’s a huge marketing opportunity for that. And if some folks have lost their jobs after the acquisition, it means there’s a lot of local talent for other banks to tap into, as well.”

Another big question about the acquisition is the allotment of philanthropy dollars. First Horizon has been a key supporter of Memphis nonprofits for decades. As part of the acquisition, TD pledged to give $40 million to the First Horizon Foundation fund. But whether that kind of support will continue is unclear. “I expect our philosophy of giving back to the community will stay strong,” says Allen. “TD does a lot of sponsorships, they invest in the communities they’re in, and I think they have a similar philosophy to ours. I think a big part of this is that Bryan Jordan will remain in Memphis as vice chair of TD Bank group. So that’s a big deal for Memphis, and the regional hub, that his passion for the community and the city will remain.”

“First Horizon has made such a huge difference. It’s not just the financial support. Employees have volunteered their time, or become board members for many organizations, or are season-ticket holders. And the hope is that these individuals will continue to engage.” — Elizabeth Rouse, ArtsMemphis CEO

Until the deal closes, the First Horizon Foundation will continue to operate as it has normally. In some cases, it’s actually upping its significant contributions. One of First Horizon’s longtime nonprofit partners, ArtsMemphis, celebrated the tenth anniversary of its ArtsFirst Grant initiative with a largest-ever annual contribution of $650,000. Over a decade, First Horizon has contributed $4.7 million to the initiative. ArtsMemphis president and CEO Elizabeth Rouse credits the longtime partnership for supporting local arts, especially in the past few difficult years.

“First Horizon has made such a huge difference,” she says. “It’s not just the financial support. Employees have volunteered their time, or become board members for many organizations, or are season-ticket holders. And the hope is that these individuals will continue to engage. The communication we’ve received from First Horizon is that Memphis will remain a regional hub and that TD recognizes the history here. That Memphis is still critical, and that philanthropic support is critical to TD. If the relationship changes over the years it will have a huge impact, but we’re hopeful that doesn’t happen.”

Until the transaction closes, there are still many unknowns. Historically, big acquisitions like this in Memphis have meant job losses and less philanthropic support. “I worked at the National Bank of Commerce for years,” says Kelley, “and we saw when SunTrust came and bought it, a lot of those jobs went away. Same thing with Union Planters when Regions Bank came in and bought them, many of those jobs went away.

“And much of the concern lies in the fact that for the first time in a century, the three big legacy banks won’t be here in town. But again, that’s where smaller banks will see their opportunity to grow and create new business for themselves.”

Customers should expect more of these types of transactions in the banking world. Allen has seen a surge of mergers and acquisitions activity across the country, with big banks buying up smaller organizations, and some small banks joining forces to compete. “That’s the kind of world we live in right now, and I don’t think it will change anytime soon. So we’re fortunate to have a partner like TD, which has been around for 167 years. I’ve talked to several of my colleagues who used to work for TD, and they had nothing but great things to say about the organization.”

When the transaction is complete, TD will become a top-six U.S. bank, with about $614 billion in assets and 1,560 locations across 22 states. It eyes Memphis as a platform for regional growth, giving it a foothold in attractive Southeastern markets, which TD estimates will grow 50 percent faster than the national average. “First Horizon is a great bank and a terrific strategic fit for TD,” Bharat Masrani, group president and CEO of TD, said in a statement. “It provides TD with immediate presence and scale in highly attractive adjacent markets in the U.S. with significant opportunity for future growth across the Southeast. Working with the First Horizon team, TD will build upon the success of its strong franchise and deliver the legendary customer experiences that differentiate us in every market across our footprint.”

As we’ve seen, Memphis is a resilient city. Once all the First Horizon branches swap to the TD brand, it will be a brave new economic world for the city and the region. When the dust settles and the transaction is closed (expected to happen in early 2023), TD will have plenty of decisions to make. But the largest impacts won’t be felt until a little ways down the road.