VOL. 129 | NO. 12 | Friday, January 17, 2014
First Horizon Reports Profitable Quarter
By Andy Meek
The first earnings presentation by the Memphis-based parent company of First Tennessee Bank in 2014 – its 150th anniversary – offered a recap of the fourth quarter, in which the company reported lower revenue but higher profit than during the year-ago period.
First Horizon National Corp. announced Friday, Jan. 17, it reversed a more than $107 million quarterly loss during the third quarter by scoring a little more than $49 million in net income between October and November, which beat its fourth quarter profit of a little more than $40 million in 2012.
Revenue, however, was a little more than $292 million in the fourth quarter of 2013, down from about $317 million one year earlier.
First Horizon held an “analyst day” in Memphis during the fourth quarter, bringing analysts from prominent investment firms here to tout the company’s operational philosophy and strategy. That gathering came only a few weeks after Moody’s Investors Service downgraded the long-term ratings of First Horizon and its subsidiaries, and the takeaway from analysts generally was that First Horizon still has its work cut out for it.
First Horizon chairman and CEO Bryan Jordan addressed that skepticism indirectly on Friday with the company’s latest earnings release, describing the company’s performance as akin to a game of inches.
In 2013, Jordan said, First Tennessee and its capital markets division kept building on its promise “to be the best at serving our customers, one opportunity at a time.” He went on to note the company earned the number one market share spot in Tennessee during the year, grew loans in the regional banking unit and continued winding down its non-strategic businesses. Going forward, the watchwords remain improving asset quality, keep a lid on costs and create long-term shareholder value, Jordan said.
Memphis-based First Horizon National Corp. reported higher fourth-quarter profit.
(Daily News File/Brandon Dill)
Highlights for the fourth quarter included First Tennessee seeing 2 percent loan growth and 2 percent growth in average core deposits. Asset quality improved, with a 58 percent drop in net charge-offs, and the company’s loan loss provision – the cushion to cover bad loans – was down 29 percent year over year.
Bank analyst Kevin Reynolds of Wunderlich Securities Inc., who in the past has tended to be bullish on the First Horizon story, titled an analyst note he published in the wake of the company’s earnings Jan. 17: “Core (Earnings Per Share) Weaker Than the Headline Suggests Despite Solid Regional Banking Trends.”
“In order for (First Horizon) shares to move meaningfully higher,” he wrote, “we believe one of two things has to happen. Either a rise in short-term interest rates or a sale of the company, neither of which is likely over the next 18 to 24 months, in our opinion.”
Also during the fourth quarter, First Horizon reported an efficiency ratio of 89.6 percent. That’s up from 84 percent in the fourth quarter of 2012, and it’s still higher than the bank would like.
An efficiency ratio of 89 percent essentially means First Horizon spends 89 cents for every dollar it makes.