Coronavirus delays First Horizon's acquisition of 30 Truist branches until Q3

Dive Brief:

The coronavirus impact is delaying First Horizon’s move to buy 30 branches from Truist until the third quarter of 2020, the Memphis-based bank’s CEO, Bryan Jordan, said Tuesday in an earnings call. The deal was expected to close early in the year when it was first announced in November.
Postponing the branch acquisition "will alleviate customer disruption ... and allow us to comply with social distancing guidelines," Jordan said Tuesday, according to American Banker.
First Horizon shareholders are expected to vote Friday on the bank's proposed merger with IberiaBank. Jordan said that deal should still close on schedule in the third quarter. However, the banks previously expected the deal to close in the first quarter when it, too, was announced in November.

Dive Insight:

The Justice Department required SunTrust to divest 30 branches as a condition of its own merger with BB&T to form Truist in December. First Horizon agreed to buy the branches — in Georgia, North Carolina and Virginia — and assume approximately $2.4 billion in deposits for a deposit premium of 3.4%. It also committed to purchasing about $410 million in loans.

The First Horizon-IberiaBank deal would create a financial institution with $75 billion in assets, $57 billion in deposits and $55 billion in loans, according to a November release.

"We have made a great deal of progress planning the integration," Jordan said Tuesday, a sentiment echoed by IberiaBank CEO Daryl Byrd in an earnings release Friday.

"We continue to diligently work on the merger planning process," Byrd said. "Our employees remain engaged and committed to creating a top-tier regional banking institution and look forward to all we can accomplish for our clients and shareholders as a combined franchise."

First Horizon's net income fell sharply in the first quarter, to $16.5 million from $103.4 million a year earlier. The bank set aside $145 million, a move that takes into account both the effect of the pandemic and the adoption of current expected credit loss (CECL) accounting standards.

IberiaBank on Friday reported a 66% decrease in its quarterly earnings from a year earlier, to $32.8 million. It boosted its loan-loss provision by more than 400% to $69 million from 2019's first quarter.