Uncertainty surrounding Toronto-Dominion Bank’s potential $13.4 billion acquisition of Tennessee-based First Horizon continues to increase, though the deal — for now — is not in immediate jeopardy of falling through, according to banking experts and both companies.

TD and First Horizon do not have an estimated closing date for the first time since the agreement was announced in February 2022.

In the Knoxville area, First Horizon has 25 branches and almost 600 employees.

TD planned to close the First Horizon deal in the company’s first quarter between November 2022 to January 2023 after receiving the necessary regulatory approval.

But the past two months have seen a series of delays impact the deal’s timing. The projected closing date went from TD’s first quarter to Feb. 27 to May 27 to now no date at all.

The latest delay occurred after TD confirmed to First Horizon the company would not receive the necessary regulatory approvals to close a deal prior to May 27, according to an annual report filed by First Horizon to the U.S. Securities and Exchange Commission on March 1.

"TD is fully committed to the transaction and we are in discussions with First Horizon about a potential further extension beyond May 27,” TD said in a statement to the USA TODAY Network on March 6 regarding the deal. “This is a great transaction that offers scale and new capabilities for our U.S. bank."

First Horizon declined to comment for this story.

Unanswered questions remain about what the potential merger would look like and the impact on First Horizon customers and employees once a deal is completed, though for now what looked like a formality remains up in the air.

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Insight into the banking regulatory approval process

The Office of the Comptroller and Currency and Federal Reserve Board are among the regulators overseeing TD and First Horizon’s merger process.

The OCC held a public comment meeting on the merger in August where those in favor and against the deal could voice their opinion.

An OCC spokesperson emailed the USA TODAY Network that the OCC does not comment on specific banks or pending decisions.

As part of the application process, the Fed examines the application and judges it based on several specific factors given to it by the U.S. Congress. Those include competition; bank prudential requirements; the convenience and needs of the community; financial stability; and anti-money laundering.

The governors at the Fed Board, who are nominated by the president and confirmed by the Senate, generally vote on the merger’s approval.

As of March, the Fed has not taken action on the potential TD-First Horizon merger. There is no legal deadline for this process, and once the Fed has concluded its process it announces whether the application has been approved or denied.

No one at the Fed would comment specifically on the TD-First Horizon merger.

When the TD Bank-First Horizon merger setbacks began

As part of the agreement, TD and First Horizon said the transaction would terminate if it did not close by Feb. 27, 2023 — unless the date was extended.

Up until January, TD reiterated confidence to the USA TODAY Network through multiple statements the deal would conclude in the company’s first quarter. The first public acknowledgement of a delay came during comments made by TD Bank CEO Bharat Masrani at the Canadian Bank CEO Conference in Toronto in January.

“So given all that we, last quarter, I said that instead of original expectation of closing within the first fiscal quarter of this year will be the first fiscal half, which seems to be appropriate, given all the other stuff that's been going on,” Masrani said. “So that's our expectation on when that gets done.”

The reasons for a delay? Issues regarding securing regulatory approval and finalizing a Community Benefits Agreement, according to Masrani.

In February, one of those issues was solved. TD Bank announced a five-year, $50 billion Community Benefits Plan agreement developed in coordination with the National Community Reinvestment Coalition to benefit areas across TD Bank’s expanded presence in the Southeast U.S. once the merger is complete.

Even as TD remains confident the deal will occur; the regulatory process remains ongoing. On Feb. 9, TD Bank announced plans to move the closing date from Feb. 27 to May 27. Then on March 1, that shifted to no projected date at all.

After the latest delay, First Horizon offered more specifics regarding where it believes the deal stood in the SEC filing in March.

“There can be no assurance that an extension will ultimately be agreed or that TD will satisfy all regulatory requirements so that the regulatory approvals required to complete the pending TD Merger will be received,” the filing states.

Where does TD-First Horizon merger go from here?

Barclays Capital offered the following analyst note on the merger’s status after TD’s first quarter earnings report on March 2.

“Further, while visibility on the ultimate regulatory approval and timing is just as opaque as it was when the deal was announced, we believe that the pound of flesh being exacted on TD at both ends of the spectrum (when the deal was announced and when the deal is potentially in jeopardy) is excessive, providing some relative upside when its valuation reverts,” Barclays said.

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Greyson Tuck is a Memphis-based bank consultant and attorney with Gerrish Smith Tuck.

He has worked on roughly 60 mergers and acquisitions in the last decade on both sides of the deal, mainly with community banks.

Tuck cited an executive order signed by President Joe Biden in July 2021 that called for the Department of Justice and federal regulators to tighten their scrutiny of bank mergers as a potential reason for the deal's delay. TD and First Horizon announced their agreement seven months later.

His order noted at the time that during the past two decades, the U.S. has lost 70% of the banks it once had, with around 10,000 bank closures. Communities of color and rural areas have been disproportionately affected.

“The regulators are much more leery of bank transactions and are very much requiring additional information, requesting additional information, really being much more in-depth in their review, in their analysis of the transaction,” Tuck said. “That doesn’t reflect a belief the prior way was wrong. I’m not saying the old way was a bad way. That’s not my belief. (In) today’s regulatory environment they’re looking at things much more closely than they used to.”

Tuck said if he was betting on whether the deal occurs, he expects the merger will be completed.

“You’ve got a lot of smart people, lawyers, bank executives, investment advisors that have spent a lot of time that know if this deal doesn’t receive regulatory approval, a lot of collateral damage will come with that,” he said. “It would be a reputational black eye for TD and First Horizon for the regulators.”

The Associated Press contributed to this report.

Omer Yusuf covers the Ford project in Haywood County, residential real estate, tourism and banking for The Commercial Appeal. He can be reached via email Omer.Yusuf@commercialappeal.com or followed on Twitter @OmerAYusuf.

This article originally appeared on Memphis Commercial Appeal: Is First Horizon merger with TD Bank still happening after delays?