TD Bank unveils $50B Community Benefits Plan. What's the impact on First Horizon deal?

Omer Yusuf, Memphis Commercial Appeal
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Leo Salom, left, president and CEO of TD Bank, and Bryan Jordan, right, president and CEO of First Horizon, speak during a luncheon Monday, Aug. 1, 2022, at the Holiday Inn University of Memphis. The pair made their first joint public appearance at the luncheon after an agreement was reached in February 2022 concerning a $13.4 billion proposed merger between the two companies.

Toronto-Dominion Bank’s $13.4 billion acquisition of Memphis-based First Horizon Corp. is another step closer to completion now that one of the last hurdles is seemingly overcome.

The Canadian bank announced this week a five-year Community Benefits Plan agreement developed in coordination with the National Community Reinvestment Coalition that will provide an estimated $50 billion of impact to local communities across TD Bank’s expanded presence once the merger is completed. The plan will provide lending, philanthropy, banking access and other activities for diverse and underserved communities.

It also includes the creation of a $40 million TD New Horizon Foundation, which will focus on giving in Memphis and other First Horizon markets over five years. This will replace the First Horizon Foundation, which TD donated $40 million to as part of the agreement between the companies.

"Banks have an important role in providing economic opportunity and supporting changes that help Low- and Moderate-Income (LMI), diverse and underserved communities achieve their financial goals,” said President and CEO of TD Bank Leo Salom, in a statement.

TD’s $50 billion Community Benefits Plan comes less than a week after the two banks agreed to extend the “outside date” of their $13.4 billion proposed merger from Feb. 27 to May 27. TD Bank CEO Bharat Masrani last month cited the regulatory approval process and ongoing discussions for the bank to complete a community benefits agreement as two reasons for the delay in acquiring Memphis-based First Horizon at the Canadian Bank CEO Conference in Toronto.

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What else is included in TD Bank’s $50 billion Community Benefits Plan?

  • TD plans to open at least 25 new stores and 25 ATMs in those underserved areas over the next five years and there will be no merger-related First Horizon store closures.

  • The bank hopes to enable affordable home ownership by increasing residential mortgage loans, including first-time homebuyer and home improvement loans to $21 billion for lower and moderate income and minority borrowers.

  • TD plans to offer $7.75 billion in lending to small businesses with under $1 million in annual revenue with a focus on minority- and women-owned businesses and those in lower and moderate income and/or rural areas.

  • The bank will also provide $17.5 billion in community development loans and other investments to support economic development activities and affordable housing projects.

TD solicited feedback from NCRC leadership and nonprofits from both TD and First Horizon markets through months of consultation to identify the greatest areas of need across 22 states and Washington, D.C., according to the news release.

The First Horizon building in Downtown Memphis on Feb. 28, 2022.
The First Horizon building in Downtown Memphis on Feb. 28, 2022.

TD will meet annually with NCRC to discuss and measure progress on the elements of the plan.

"TD Bank's brought dedication and open minds to the meetings with NCRC members that brought us to this strong and promising agreement," said Jesse Van Tol, National Community Reinvestment Coalition president and CEO. "The deal we just signed will ensure that communities of need see tangible increases in resources and economic opportunity in their neighborhoods — as every bank merger is legally required and morally bound to do."

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What to know about the First Horizon-TD Bank deal

TD announced the $13.4 billion all-cash agreement in February 2022, First Horizon shareholders voted to approve the agreement in May. TD initially hoped to close the deal by the end of the company’s first half of the year by April 30.

Once an agreement is finalized, TD’s U.S. franchise, based in Cherry Hill, New Jersey, will become a top-six U.S. bank and significantly expand its Southeast presence. TD plans to make Memphis a “regional” hub once the merger is complete.

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: TD Bank-First Horizon deal: What to know about Community Benefits Plan

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