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Staff Photo by Matt Hamilton / First Horizon President Bryan Jordan, left, talks about the pending merger with Toronto Dominion Bank as Chattanooga market president for First Horizon Jay Dale, right, following a speech to the Chattanooga Rotary Club Thursday at the Westin Hotel in Chattanooga.

The head of the state's biggest bank expects Chattanooga and Tennessee to outperform the nation in economic growth this year.

Despite greater economic uncertainties and higher interest rates and inflation, First Horizon President Bryan Jordan said Thursday he expects Chattanooga's gross domestic product to rise 50% faster than the U.S. as a whole.

"With more people and industry moving here and the high demand for housing and other services, I don't see this local economy as overextended," Jordan told the Chattanooga Rotary Club in a luncheon speech Thursday.

"It is growing rather rapidly but I think the kinds of success you are seeing here tends to breed more success. Communities that are stable and well-governed with natural attractions like Chattanooga, I think will do very, very well. As we look across our 12-state footprint, one of our most important markets is right here in Chattanooga."

(READ MORE: Canadian bank buys Chattanooga's biggest bank, First Horizon, for $13.4 billion)

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First Horizon head optimistic about local economy

Although wages and personal income remain below the national average in Chattanooga, the six-county metro area has reclaimed all of the jobs lost during the COVID-19 virus outbreak and grew its employment last month to 1,175 jobs above the pre-pandemic levels of two years earlier, according to data released Thursday by the Tennessee Department of Labor and Workforce Development.

Nationwide, employment is still about 1.4%. — or 6.8 million jobs — below the level of two years ago before the pandemic began shutting down much of the economy.

"In our footprint, we're still seeing businesses grow and consumer demand increase, even with all of the uncertainties from the war in Ukraine and the increases we expect in interest rates," Jordan said in an interview after the speech. "I think the economy is in a more uncertain place than it was three months ago, but I still think the economy is fundamentally sound, especially in this region."

Jay Dale, the market president for First Horizon in Chattanooga, said deposits and loan demand are showing increases in recent years.

With nearly $3.1 billion in local deposits, First Horizon is the biggest bank in metropolitan Chattanooga with 22.2% of all deposits shared by the 27 banks operating in the Chattanooga market, according to the most recent data compiled by the Federal Deposit Insurance Co.

In the two-year period that ended June 30, First Horizon grew its local deposits by more than a third even after closing one of its local branches.

(READ MORE: Michael Woody named First Horizon branch manager and more Chattanooga-area career moves)

Jordan, who serves as a banking adviser to the Federal Reserve Bank in Atlanta, said he expects the Fed to boost rates by 50 basis points in each of the next couple of months as part of multiple increases expected this year. But even with such increases, the Fed funds rate should still be at historically attractive rates to accommodate more growth in the economy.

First Horizon should be well-positioned to capitalize on the growth in the Southeast where the bank now operates in 12 states, most of which are growing faster than the U.S. as a whole. Jordan said the bank and its consumers should benefit by the pending merger with one of the biggest banks in Canada.

First Horizon announced in February it has agreed to a $13.4 billion purchase by Toronto Dominion Bank. The all-cash purchase offer was nearly 40% above the stock price of First Horizon when it was announced, and Jordan said the two banks share a similar culture and emphasis on local autonomy in their operations.

"If I had to pick a banking organization that did business like us, they would by far be the closest, and with their size and scale, I think this really positions us to be a much more powerful force in the marketplace for delivering solutions and capabilities for our customers," Jordan told the Chattanooga Rotary Club.

The combined bank will be the sixth biggest in the U.S., and TD Bank said it expects to realize about $610 million in pre-tax savings from synergies of the two banks, which is expected to help boost overall earnings for the combined company. TD also said it expects to incur merger and integration costs of $1.3 billion in the first couple of years after the close as the banks move to a single operating platform.

TD said it has committed to retaining all of First Horizon's front-line bankers with no immediate branch closures as a result of the transaction since there is little overlap in the territories served by the two banks. TD also said it will contribute $40 million to the First Horizon foundation once the deal is closed.

Despite its growing size, Jordan said banking remains a people-oriented business where local autonomy and decision making is key. First Horizon maintains advisory boards in its local markets.

(READ MORE: Chattanooga banks grew by double-digit levels for second consecutive year during pandemic)

The combined bank will have over 1,500 banking center locations, and Jordan said he expects that TD will grow the number of branches in some areas and is likely to extend banking hours as it has in some markets.

"TD wants to be America's most convenient bank, and it is geared toward that differentiated experience," Jordan said.

First Horizon expects to mail its proxy statement about the proposed merger to shareholders this spring and, pending shareholder and regulatory approval, the merger is expected to close by the first quarter of 2023.

Changing all of the names of the bank and the technology conversion of the First Horizon operations to the TD platform could take until early 2024, if it proceeds as First Horizon's acquisition of Iberia Bank did in Louisiana in 2020. The informeraion technology system conversion in that merger was completed in February, Jordan said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340. Follow him on Twitter @dflessner1.

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