“‘We’ve run the institution like we have for the last 159 years. We never assumed regulatory approval was a given. We always knew there was a risk in this case. We’ll continue to serve our clients and deliver value to them and see what happens next.’”
That was First Horizon Bank Corp. CEO D. Bryan Jordan’s take in an interview with CNBC on the operations of his bank since it announced a takeover by TD Bank for about $13 billion in February of 2022.
That deal is no longer happening, the banks announced Thursday, because TD Bank was unable to secure a regulatory timeline.
Jordan did not provide any additional details on First Horizon’s
FHN,
joint move with TD Bank
TD,
TD,
to scrap their merger.
“I don’t have any real explanation for you,” Jordan said in the interview. “We’ve worked very well together [with TD Bank] over the last 15 months. We worked very hard to win these regulatory approvals.”
During this process, First Horizon
FHN,
“never assumed regulatory approval was a given,” he said.
“We always knew there was a risk in this case,” Jordan said. “We’ll continue to serve our clients and deliver value to them and see what happens next.”
For now, the bank will continue to operate as a stand-alone business, but Jordan said consolidation in the banking business is needed to achieve scale in the business and to build up resources to deal with regulators.
“You’re going to have to see some consolidation,” he said.
During the merger process, First Horizon continued operating has it had for the past 159 years, he said.
Jordan said the banking system faces a “tremendous amount of uncertainty” and that Congress should study potential changes to deposit insurance as administered by the Federal Deposit Insurance Corp.
“It’s a real opportunity to articulate a long-term deposit insurance strategy,” he said. “Congress will have to act on that and bring certainty back.”
He argued against any quick fixes in the current banking crisis that has decimated regional bank stocks.
That includes knee-jerk decisions such as a ban on short selling of bank stocks, but he said a longer-term solution such as an expansion of deposit insurance could help boost confidence in the system.
“I don’t think any spur-of-the-moment decisions are good,” Jordan said.
The bank hasn’t made any significant changes to its lending strategy, partly because it’s already adapted its loan book to account for higher interest rates.
But overall credit conditions have tightened somewhat, and customer demand has drifted down since the regional bank crisis began in early March with a run on deposits at Silicon Valley Bank, he said.
Despite the turmoil over the merger and the banking sector, First Horizon remains in solid shape.
“When I look at regional banks like us, we have an extraordinarily strong capital base,” he said. “We’ve not made any significant shifts in tightening our lending standards. We try not to make significant changes in the way we think about lending standards.”
First Horizon stock fell 33% after it said its merger deal with TD
TD,
would not go through.
Also Read: First Horizon stock plunges after merger deal with TD Bank is mutually terminated
Emily Bary contributed to this article
