Canada-based Toronto-Dominion Bank (TD, Financial) expanded both its geographical reach and its efforts to help minority communities earlier this week, even as it released strong financial results for the first quarter of 2022.
On Feb. 28, the company announced the acquisition of First Horizon Corp. (FHN, Financial) in an all-cash deal valued at 13.4 billion Canadian dollars ($10.5 billion).
First Horizon, based in Memphis, Tennessee and originally known as First Tennessee Bank, rebranded back in October of 2019, intending to grow into other states. A month later, it merged with IBERIABANK.
According to Toronto-Dominion, First Horizon reported having $89 billion in assets on Dec. 31, 2021. The deal allows Toronto-Dominion to take over 1.1 million of First Horizon’s consumer, business and commercial customer accounts, giving the bank group a top six U.S. bank rating. It operates 412 branches.
Before the purchase, Toronto-Dominion said it had a network of 1,560 stores, serving 10.7 million U.S. customers across 22 states. It owns over 2,600 branches globally, servicing more than 27.5 million customers.
"First Horizon is a great bank and a terrific strategic fit for TD,” Bharat Masrani, group president and CEO, TD Bank Group, 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."
The large purchase is expected to allow the corporation to grow 50% faster than the U.S. national average. The purchase will officially close in the first quarter of TD Bank Group's 2023 fiscal year.
On March 2, the bank announced the launch of TD Home Access Mortgage, a new product designed to increase homeownership opportunities in black and hispanic communities across several markets within its footprint.
TD Home Access Mortgage provides prospective buyers with an affordable mortgage option, including a CA$5,000 lender credit, which does not require repayment, that borrowers can use for closing costs or toward a down payment on a home purchase. It also offers more flexibility with a greater debt-to-income ratio and expanded underwriting requirements, as well as credit parameters that increase accessibility.
First-quarter results compared with the first quarter last year showed reported diluted earnings per share were CA$2.02, compared with CA$1.77. Adjusted diluted earnings per share were CA$2.08, compared with CA$1.83. Reported net income was CA$3.7 billion, compared with CA$3.3 billion a year ago. Adjusted net income was CA$3.83 billion, compared with CA$3.38 billion.
U.S. retail net income was CA$1.27 billion, an increase of 27% compared with the first quarter last year. The bank's investment in Charles Schwab Corp. (SCHW, Financial) contributed C$252 million in earnings, an increase of 21% compared with the prior-year quarter.
"TD started the year strong, delivering revenue growth across all our business segments as customer activity gained additional momentum," Masrani said. "With a focus on growth, we continue to make investments in technology and new capabilities, positioning us well to meet our customers' and clients' evolving needs."
Masrani added that he was pleased to have announced his company’s deal with First Horizon earlier this week, saying it is a "bold acceleration of our U.S. strategy to acquire a premier regional bank, with a strong presence in highly attractive markets across the U.S. Southeast – a terrific strategic fit for TD."
