Lafayette-based IBERIABANK to merge with First Horizon, headquarters moving to Memphis

Leigh Guidry | Lafayette Daily Advertiser

IBERIABANK and Tennessee-based First Horizon National Corporation announced a merger Monday, a move that will shift the 132-year-old Louisiana bank's headquarters to Memphis as a newly created financial service company that would become one of the South's largest.

The combined company will operate under the First Horizon name, according to terms of the agreement announced by the companies in a joint statement. The new company's regional banking headquarters will be located in New Orleans.

The move to Memphis was a "very simple business decision," Daryl G. Byrd, president and CEO of IBERIABANK, said at a press conference Monday. The 150-year-old First Horizon has $11 billion in deposits in Memphis, and the 132-year-old IBERIABANK has $2.6 billion in deposits in Lafayette.

"It was important to protect our deposit base there," Byrd said.

The merger is expected to cost Lafayette jobs, particularly among executives and employees at the IBERIABANK headquarters downtown after the new company assumes its central office in Memphis.

IBERIABANK, which employs more than 3,300 workers, reported having 328 in Lafayette Parish in 2018, including employees at the headquarters, according to the most recent data available from the Lafayette Economic Development Authority. It is unclear how many of those jobs might be lost in the merger, and bank officials could not provide specifics.

"There doesn't appear to be a reason to keep an executive presence in Lafayette," said Brian Bolton, who holds the Dwight W. Andrus Jr./BORSF Eminent Scholar Endowed Chair in Finance at the University of Louisiana at Lafayette. "It probably weakens Lafayette."

IBERIABANK has been a significant business, the largest bank-holding company in Louisiana and one of the few publicly-traded in the state.

"So as a business center, this hurts," Bolton said. "If other businesses follow or if services that support it have to leave or transform, this weakens Lafayette as a business center."

Despite the move, the combined company "will maintain a significant operating presence in all of the markets in which both companies operate today," according to the joint announcement. First Horizon does not have locations in Louisiana, but IBERIABANK does have branches in Tennessee, and the two banks have other shared markets.

"It's too early to know where all the impact will be," Bryan Jordan, chairman and CEO of First Horizon, said at the Monday press conference at IBERIABANK'S downtown Lafayette headquarters. "We are very conscious of the impact on people.

"We are hopeful attrition can take care of a lot of that impact, but we will be proactive in providing severance and support for those that need it," Jordan said.

Byrd said there won't be much impact on individual branches other than the name change and perhaps more products for customers.

"If you're a teller or at a branch, you have a job," Byrd said. "If you deal with people, you have a job. If you are in back office or operations, we will deal with that."

Byrd will serve as the new company's executive chairman of the board of directors and Jordan as chief executive officer. The new company will have nine board members — five from First Horizon and four from IBERIABANK.

The merger is expected to close in the second quarter of 2020, subject to customary regulatory approvals, according to the joint statement.

The deal will offer IBERIABANK shareholders 4.584 shares of First Horizon for each IBERIABANK share they own. First Horizon shareholders will own 56 percent and IBERIABANK shareholders will own 44 percent of the combined company.

Additionally, IBERIABANK shareholders will receive a 43 percent increase in their dividend after consummation of the transaction, based upon each company's current dividend per share.

More: IberiaBank to close or consolidate 22 branch locations

"By joining forces with First Horizon, we will create an organization that has the resources to invest in advanced technologies and expand lending capacity and product offerings for our combined clients," Byrd said in a release. "We chose a partner who values deep relationships and is culturally aligned with our core mission, which is to create a great place to work for employees, deliver extraordinary, value-based client service, meet the expectations of our shareholders and invest in the communities we serve.

"Our partnership will leverage our best-in-class workforce and build on and complement the well-established strong foundations of both organizations. We look forward to bringing our companies together to better serve our clients and communities."

Other leadership from IBERIABANK will be:

Anthony Restel, Chief Operating Officer

Michael Brown, President, Regional Banking

Terry Akins, Chief Risk Officer

Beth Ardoin, Chief Communications Officer

Leadership from First Horizon will be:

William C. Losch, III, Chief Financial Officer

David Popwell, President, Specialty Banking

Susan Springfield, Chief Credit Officer

Tammy LoCascio, Chief Human Resources Officer

The joint release from the companies cites strategic and financial benefits to come from the merger, including making it a "significant player throughout the Southern market with $75 billion in assets."

"This combination enhances the combined company's ability to invest in advanced technologies and innovation to strengthen its business and create a competitive advantage in a dynamic market environment," according to the release.

While merging has the potential to create a "better and stronger" company than the two individually, Bolton said, it puts them in a challenging market competing against other, still-larger regional banks.

The companies tout the experience of the leadership team, which comprises members from both banks, and said it will work to have "strong cultural alignment."

"Together, First Horizon and IBERIABANK are committed to preserving the strong cultures of both companies to deliver superior client service," it states.

Financial benefits would include approximately $170 million in pre-tax cost "synergies," or savings, by removing redundancies in overhead, bank branches, operations and computer services.

Byrd and Jordan talked about having more capacity to make loans and to invest in technology that would allow the new company to provide better products to customers.

"We could do more together than apart," Byrd said, pointing out the newly combined company's market cap of $10 billion.

"We will be in a better position combined to serve our customers," Jordan added.

As a combined company it is expected to lead in profitability among its peers and in operating and returns in the industry, according to the statement.

This is not the first time the Lafayette-based IBERIABANK has aimed for "efficiencies."

In 2018 it announced it would close or consolidate 22 branch locations during the second and third quarters of the year, giving the bank 296 locations across the Southeast.

The move was part of the bank's "long-term strategy" to improve efficiency, especially as it moves toward digital banking, according to the 2018 release.

The closures are on top of consolidations that were part of Iberia's acquisition of Florida's Gibraltar Private Bank and Trust in a $223 million deal that closed earlier in 2018.

Since the end of 2014, the company had opened or acquired 81 branches and closed or consolidated 53 branch locations before the 2018 announcement.

IBERIABANK started in 1887 in New Iberia as Iberia Building Association. It expanded in the late 1980s and moved into Lafayette in 1989 with the acquisition of Acadia Savings & Loan.

It now operates in 10 states — Louisiana, Alabama, Florida, Arkansas, Tennessee, Georgia, Texas, North Carolina, New York and South Carolina.

The new company also will create the Louisiana First Horizon Foundation, funded with $20 million for initiatives throughout Louisiana, Byrd said.

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