A TD Bank branch in Toronto, on July 12, 2022.Fred Lum/the Globe and Mail
Toronto-Dominion Bank TD-T is committing US$50-billion for the communities it is expanding into with its pending purchase of First Horizon Corp., marking a key step as Canada’s second-largest lender seeks regulatory approval to close the deal.
The five-year community benefits plan focuses on lending, banking access and other services for diverse and underserved groups, TD said Wednesday. The lender’s US$13.4-billion deal to buy the Tennessee-based bank comes as U.S. regulators more closely scrutinize mergers in the sector, prolonging expected deal closing timelines as acquirers work through more critical approvals processes.
TD said it will open 25 new branches and promised US$21-billion in home lending for low- and moderate-income and minority communities, as well as additional funding for small-business loans and community development investments. The bank also said that there will not be any merger-related First Horizon branch closures, and that it will hire additional diverse employees to work on mortgage loans.
“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,” Leo Salom, chief executive officer of TD’s U.S. arm, said in a statement. “We are excited to continue this focus in First Horizon markets as we move forward with combining our two organizations.”
TD was called to a hearing in August where some community groups criticized the bank’s lending practices for Black and Latino clients in the United States. As U.S. regulators have ramped up scrutiny of bank combinations, the lender has pushed back its closing timelines.
On Friday, TD and First Horizon delayed the termination date of the deal to May 27, the time after which either bank can walk away. The bank previously deferred its expected closing from its first fiscal quarter to the first half of its 2023 fiscal year, or April 30.
Bank of Montreal BMO-T found itself on a similar path with its acquisition of California-based Bank of the West. The lender had also changed its closing date to the first quarter of this year from the end of 2022. The deal closed early February after receiving approval from U.S. regulators in January, which included BMO promising US$40-billion for underserved communities, largely in its new markets.
TD said it consulted with the National Community Reinvestment Coalition – a U.S. group aimed at increasing underserved community access to private capital – and non-profit groups to determine communities in need in TD and First Horizon markets across 22 states and Washington.
Of the more than 20 banks that have signed on to community-benefit agreements with the coalition, TD’s plan to open 25 new branches in underserved communities is the largest pledge of its kind to date, according to the organization’s president and CEO Jesse Van Tol.
“The deal we just signed will ensure that communities of need see tangible increases in resources and economic opportunity in their neighbourhoods – as every bank merger is legally required and morally bound to do,” Mr. Van Tol said in a statement.