Shares of First Horizon tumbled on Thursday after a previously announced $13.4 billion merger agreement with TD Bank was called off.

The companies mutually terminated the deal that was originally announced in late February 2022 due to uncertainty over if and when TD could receive regulatory approval.

First Horizon's stock plunged more than 36% on the news. TD's shares listed on the New York Stock Exchange were flat.

First Horizon’s chief executive Bryan Jordan said, "While today's announcement is unfortunate and unexpected, First Horizon will continue on its growth path operating from a position of strength and stability."

"Our strong capital position, disciplined credit quality, expense control measures, and well-diversified and stable funding mix have enabled our business to navigate challenging banking industry dynamics and remain focused on executing our client-centric growth plan," he continued. 

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TD will make a $200 million cash payment to Memphis, Tennessee-based First Horizon under the terms of the termination agreement. The payment is in addition to a $25 million reimbursement due to First Horizon pursuant to the merger agreement.

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"This decision provides our colleagues and shareholders with clarity," TD Bank Group CEO Bharat Masrani said in a statement. "Though disappointed with the outcome, we move forward with a strong, growing franchise in the United States, servicing more than 10 million customers across our footprint."

First Horizon, with $80.7 billion in assets as of March 31, 2023, operates in 12 states in the southern U.S. TD previously said the deal would make it the sixth largest bank in the U.S.