The loss of First Horizon Bank as an anchor Memphis institution is a body blow that may not be fully understood for years. 

After the November closing of the bank’s sale to Toronto-Dominion Bank Group, decisions made in Memphis since the Civil War will move about 1,000 miles away to corporate headquarters in Canada or to its U.S. mother ship in Cherry Hill, New Jersey. 

For the first time in more than 100 years, Memphis does not have its own homegrown major bank.

The sale will eventually ripple throughout Memphis – financial importance, talent, charitable and civic contributions, and more.

Déjà vu

If this merger runs true to form, we’ll hear plenty of statements about how important Memphis is to the new owners, how workers won’t lose their jobs, and why Memphians shouldn’t be concerned.

It’ll be déjà vu all over again.

Remember 1989 when representatives of British brewing company Bass PLC flattered local politicians and business leaders about their commitment to Memphis following their purchase of legendary Holiday Inn.  Three years later, it moved Holiday Inn’s headquarters to Atlanta.

Remember 1995 when Promus Hotel Corporation spun out its gaming interests into Harrah Entertainment Group.  Its headquarters were located at 1023 Cherry Road, but it moved to Las Vegas in 1999.   

Remember 2008 when the CEO of Delta Air Lines gave a speech about how his company’s merger with Northwest Airlines would benefit the Bluff City.  The merger was about “addition, not subtraction,” and even the direct flight from Memphis to Amsterdam would remain. Five years later, it pulled the plug on the hub here, devastating Memphis International Airport’s passenger service. 

Corporations in the midst of change are big on making promises to Memphis but short on delivering on them.

One By One

Remember a few decades ago when within a few blocks in downtown Memphis, there were four banks and a major loan and savings institution.  It was a time when Memphis was considered a major banking center in the South.  

First, it was C&I Bank; then Regions Bank, headquartered in Birmingham, took over Union Planters National Bank; SunTrust Bank, headquartered in Atlanta, took over National Bank of Commerce; Leader Federal Savings and Loan ultimately was part of Regions Bank; and now First Horizon Bank – still called First Tennessee Bank by many of us – will be headquartered a thousand miles from Memphis.    

We’ve now become accustomed to the assurances that follow these kinds of announcements but we would have to have amnesia to forget what usually follows – the loss of a major civic player, major employer with 2,100 employees, and major civic and charitable funder.  Some of the assurances even will come from Memphians in First Horizon’s C-suite who are making millions on the sale and will now deliver TD Bank talking points.

That said, First Horizon Bank executives deserve credit for holding out on a deal like this for as long as it has. 

The trend in so many areas today is that businesses in the middle are under severe stress: they either have to get much bigger or find a niche market.

In the world of American banking, First Horizon was squarely in the middle.  It was the 41st largest bank in the U.S. with $89 billion in assets at a time when the largest bank has $3.8 trillion in assets and there are 38 banks ahead of First Horizon on the list of the 100 largest banks have more than $100 billion in assets. 

Buy A Plane Ticket!

Since growing internally is difficult unless the market is brand new, companies often merge their way to success; however, mergers are a toss-up.  Most take years to be profitable and often the fit is poor (like First Horizon and Iberiabank).

We’ve adopted a general “that’s the realities of business today and there’s nothing we can do about it,” but it is disheartening to see City Hall and Greater Memphis Chamber take the loss of Tennessee’s largest bank and the fourth largest in the Southeast lying down.

It may not be any likelihood of substantially changing the sale but it would be encouraging if city elected officials and business leaders bought tickets to Canada to make the case for why Memphis is the perfect location for much of its major operations. 

It would be good for civic morale to see officials making the case for Memphis, but even more, it’s possible that it could influence decisions being made about Memphis’ place in the future of TD Bank.

Here’s the truth about our community: most people in our bicoastal business world have no conception of the middle of the country, and when they do, they think of a slow-moving, gritty city in the South.  That’s likely to be the view in New Jersey and Toronto.

There was a time when it was commonplace for mayors and Chamber officials to travel out of the city on missions like this.  It was largely driven by former Shelby County Mayor Bill Morris who said he was willing to go anywhere at anytime to tell the Memphis story. 

And he did.  It took him to an airport meeting room in London, boardrooms in the U.S., and to company headquarters in Japan.   One result: Shelby County had more than a dozen Japanese companies locating here. 

There were of course wins and there were losses, but there was no acquiescence.  Instead, corporation decisionmakers, more than anything, understood that Memphis leaders were fighting for their city, telling its story, enumerating its assets and competitive advantages, and establishing relationships.

Digging The Hole Deeper

The sale of First Horizon is particularly disturbing because a major company with two thousand employees helps to build a resource specialty in human capital and to land physical capital.  In addition, the large company often trains people who start their own companies, creating a virtuous circle in which the big company skills begets the skills for the small company and the small company’s success keeps the big company on its competitive toes.

One of the most profitable sectors of the new economy has been finance.  In particular, it has been a center of the creative economy for young, highly educated workers in the form of young MBAs, young math graduates, young human relations specialists. 

With the loss of First Horizon Bank, Memphis moves even more deeply into the service economy, where incomes are lower and there is greater inequality in earnings and fringe benefits.  As the pandemic demonstrated, these are also the jobs seen as most disposable.  The vast majority of jobs lost as a result of COVID were service economy jobs, especially those in the leisure and hospitality sector. 

So far, 88% of the leisure and hospitality jobs have returned, but unfortunately, too many of them still pay less than a living wage.

While Memphis Tourism officials engage in happy talk as these jobs return, the truth is that while it is good that these workers return to work, these jobs do nothing to drive our economy to an economy built on knowledge and technology and characterized by higher skills and higher wages.

Put simply, these service jobs are the first out and the last back. 

A New Era

Even in the pre-COVID days when City Hall and Chamber types talked so much about momentum, the economy here lagged behind comparable cities – lower jobs growth and lower income growth.

The loss of First Horizon Bank is a serious dent into the talk about momentum.  Once First Horizon’s ownership is shifted to Canada, our local banking business will be dominated by community banks that seem more real estate-oriented. 

To put this in perspective, the assets of First Horizon are 15 times bigger than all the community banks put together

It’s hard now to grasp the full meaning of the First Horizon Bank announcement, but suffice it to say, our community has entered a new era.  Trend lines and the reliance on the service economy suggest it will be an era fraught with challenges. 

It calls out for a real and shared vision for our community, more imaginative economic development planning, and straight talk about where we are and what it will take to be more competitive in the new economy.

And you can put that in the bank.


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