Canadian bank buys Chattanooga's biggest bank, First Horizon, for $13.4 billion

Feb. 28—This story was updated with additional information on Monday, Feb. 28, 2022, at 5:14 p.m.

Canada's second-largest bank is buying First Horizon Bank for $13.4 billion to expand its footprint into the United States.

First Horizon announced Monday it has signed a definitive sales agreement to be acquired by the Toronto Dominion Bank in an all-cash deal for $13.4 billion. Toronto Dominion said the purchase will allow it to use First Horizon's commercial and specialty banking capabilities in the growing southeastern U.S. market and it will continue to make investments to ramp up its commercial banking offerings.

"First Horizon is a great bank and a terrific strategic fit for TD. 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," Bharat Masrani, group president and chief executive officer of Toronto Dominion, said in an announcement of the agreement Monday morning. "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."

The offer of $25 per share for First Horizon stock by Toronto Dominion represents a premium of nearly 37% to First Horizon's close on Friday. Shares of First Horizon rose Monday by nearly 28.7% in trading on the New York Stock Exchange to their highest levels since 2007. First Horizon closed Monday at $23.48., up $5.23 per share.

Following the closing of the transaction expected in early 2023, First Horizon CEO Bryan Jordan will join Toronto Dominion as vice chair of the TD Bank Group. Jordan will continue to be based in Memphis, where First Horizon is now headquartered. First Horizon is the biggest bank in Chattanooga and was formerly known as First Tennessee Bank.

"We have built a very strong business at First Horizon, and by joining forces with TD, we will create extraordinary value for our key stakeholders with a shared customer-centric strategy, enhanced scale and a broader product set for our clients," Jordan said in a statement Monday. "We have long respected TD as a leader in U.S. banking and are confident that its continued and growing investments in our local markets will extend our long history of community support."

The deal will help Toronto Dominion's U.S. franchise emerge among the top six U.S. banks, with about $614 billion in assets and a network of 1,560 stores, serving over 10.7 million U.S. customers across 22 states, Toronto Dominion Bank said.

Jay Dale, Chattanooga market president for First Horizon, said "TD provides legendary customer service and is heavily invested in their communities," similar to the values of First Horizon.

"While there are a lot of decisions still to make, TD has committed to retaining all bankers and no branch closures," Dale said in a statement. "We're excited about what the future holds in the coming months."

Canadian lenders have accelerated their move into the United States to deploy billions of dollars in excess capital where the opportunity for growth is seen to be greater, especially in the growing Southeast market served by First Horizon.

Leo Salom, group head of U.S. Retail for TD Bank Group, will lead the combined businesses.

"As one team, with complementary businesses, distribution channels and a shared culture of best-in-class customer service, we will chart the next phase of growth together," Salom said in a statement. "The Southeastern U.S. represents a tremendous opportunity for TD and the addition of First Horizon's commercial and specialty banking capabilities will position us as a leading national player in commercial banking. We will combine our resources and capabilities and continue to invest in the region as we focus on delivering the most differentiated banking experience in our markets."

First Horizon has assets of $89 billion, including over $3 billion in deposits in Chattanooga as of Dec. 31. First Horizon operates 412 branches and serves over 1.1 million consumer, business and commercial customers across 12 states.

First Horizon emerged as the biggest bank in metropolitan Chattanooga in 1976 when the former First Tennessee Bank acquired the assets of the failed Hamilton National Bank, once the biggest bank in Chattanooga.

Toronto Dominion said it will benefit from First Horizon's strong regional presence, including leadership positions in Tennessee and Louisiana, additional density in Florida, the Carolinas and Virginia. The Toronto Dominion Bank purchase of First Horizon comes two years after First Horizon acquired the biggest bank in Louisiana, Iberia Bank.

Collectively, populations in First Horizon's markets are expected to grow approximately 50% faster than the U.S. national average, with some markets far exceeding that level, offering important future growth opportunities as Toronto Dominion invests in the region.

TD has agreed to invest $494 million in non-voting First Horizon preferred stock (convertible in certain circumstances into up to 4.9% of First Horizon's common stock) to support First Horizon's growth and franchise enhancement, including employee retention programs.

Once the transaction is completed, First Horizon's headquarters in Memphis will serve as a regional hub for TD in the U.S. TD also said it is committed to retaining First Horizon's client-facing bankers, with no planned branch closures as a result of the transaction.

In addition, upon closing, $40 million will be contributed to a First Horizon foundation.

"First Horizon and TD share a common belief that we can only thrive when the communities in which we live and work thrive. TD is committed to growing our presence and investments across the states in which First Horizon operates," Masrani said.

Contact Dave Flessner at or at 423-757-6340. Follow him on Twitter @dflessner1.