May 25, 2023
TD targets Atlanta, Florida for growth after First Horizon flop
TD's profit warning doesn't come as a surprise in this macro environment: Rob Wessel
After failing to close its largest-ever U.S. banking acquisition, Toronto-Dominion Bank has a new strategy for growth in the Southeast — do it slowly.
Canada’s second-largest bank plans to open 150 U.S. branches by 2027, targeting Florida, North Carolina, South Carolina and Georgia, including its first office in Atlanta, executives said Thursday. Toronto-Dominion sought expansion in the region with a US$13.4 billion acquisition of First Horizon Corp., which fell apart when the bank couldn’t get timely approval from regulators.
Toronto-Dominion will aggressively pursue organic growth, hire wealth advisers and look at acquisitions and other opportunities “as they present themselves,” Chief Executive Officer Bharat Masrani said Thursday on a conference call with analysts after the lender reported second-quarter results.
Memphis-based First Horizon has more than 400 branches and would have helped Toronto-Dominion extend its reach deeper into the U.S. South and as far west as Texas. The deal foundered over regulators’ concerns about the Canadian bank’s handling of suspicious transactions, a person familiar with the matter told Bloomberg earlier this month.
Masrani declined to give any details about the regulatory problems or what it would have taken to resolve them. “When the time is right, we will talk more about it,” he said.
He deflected questions about whether it would even be possible for Toronto-Dominion to even consider a U.S. retail bank acquisition right now, given the regulatory concerns. TD did buy investment bank Cowen Inc. this year to bulk up TD Securities.
“It’s hard to speculate on M&A, you know — it’s difficult to say where,” Masrani said. “Just because we have the capital, we’re not going to chase everything that’s out there. It has to make strategic sense. It has to make financial sense.”
The bank also said it doesn’t expect to meet its medium-term goal of 7 per cent to 10 per cent annual growth in adjusted earnings per share because of the collapse of the First Horizon deal and “deterioration in the macroeconomic environment.”
TD shares fell 4.2 per cent to $77.78 at 4 p.m. in Toronto, and have declined 11 per cent this year.