VOL. 123 | NO. 177 | Wednesday, September 10, 2008
New CEO Talks Up First Horizon
By Andy Meek
Bryan Jordan, the new CEO of First Horizon National Corp., was in New York Tuesday, busy with a task he also tackled at the end of his first week in the CEO’s chair Friday.
Jordan has been reaching out to Wall Street analysts in an attempt to reassure them about the direction of the Memphis-based financial services company.
At the end of his first week as the new CEO, Jordan presented his sweeping view of a company in transition at the 2008 Morgan Keegan Equity Conference in Memphis. Key in his remarks Friday was the idea that First Horizon, which is in the midst of a broad-based turnaround effort, has spent the last 15-18 months upending its business model. Over the past several months, for example, the company has been selling off its bank branch networks outside of Tennessee.
Prior to the past 15 months, First Horizon had been building new branches across far-flung markets such as Dallas, Atlanta and northern Virginia, mostly on the back of the company’s mortgage banking business, the new CEO explained. Jordan’s presentation last week also went into more detail about the thought process behind the playbook the company has come up with in engineering its turnaround.
Cutting losses, cultivating strengths
The day before he officially stepped into the CEO’s seat, First Horizon also completed the sale of its mortgage business outside Tennessee to MetLife Bank N.A. on Aug. 31. First Tennessee Bank, a subsidiary of First Horizon, chose PHH Mortgage to streamline its retail mortgage loan origination, processing and loan servicing.
PROFITS AND LOSSES: First Tennesee Bank, a subsidiary of First Horizon, is part of the parent company’s continuing effort to shore up what’s not working and emphasize what is. -- PHOTO BY ANDY MEEK
“We’ve taken our focus from expanding nationally back to focusing on our key expanding markets in Tennessee and working very hard to build out our regional franchise,” Jordan said. “In Tennessee, we see a tremendous opportunity. Our share of customers in the state is about 22 percent, so we see an opportunity to grow that.”
Internally, First Horizon talks about bumping up its customer share closer to 30 percent over the next five years.
“Our banking model is based on convenience, service and advice,” Jordan said. “We have roughly 200 branch networks across the state. We’re open till 6 o’clock every day of the week and we’re open Saturdays from 9 to 1. So we really position ourselves to serve customers with a level of convenience.”
From Memphis, FHN’s new top executive took his message to New York City for the Lehman Brothers Global Financial Services Conference Tuesday. It’s a message that is beginning to resonate with analysts and also is reflected in a stock price that is beginning to make improvements over the sharp dips of the past year.
FHN’s share price of $11.61 at the close of trading Friday was only a few cents off from its closing price of $11.69 Tuesday, which still represented about a 20 percent improvement over its share price from a month ago.
“I’ve been bullish on this story. It’s a great turnaround story,” said Robert Patten, a banking analyst with Memphis-based Morgan Keegan & Co. “They were early to the party to start raising capital and writing down their portfolios. I think the market’s starting to realize that. This is a company that will continue to improve in terms of visibility and performance.”
Reinvesting in capital
In spite of the rough business climate, Jordan said FHN nevertheless has boosted its marketing and advertising budget by $2 million and is continuing to open new branches around the state. The company apparently is making a push in the Nashville market, where five new branches will open this year.
“I think we’ve opened three in (Nashville) in the last month and a half or so,” Jordan said. Among the other high-level changes at FHN in recent weeks, the company’s treasurer, Tommy Adams, began filling in as chief financial officer while the company looks for a permanent candidate. Frank Gusmus was tapped to be the interim president of FTN Financial, First Horizon’s capital markets business, while a permanent candidate also is found for that job.
Several of the company’s senior people were tapped to join a 13-member executive committee that Jordan envisions will meet weekly for in-depth discussions about FHN’s operation.
“In summary, we feel like we’re taking the right steps to get these national businesses behind us,” Jordan said. “We’re focused strongly on our Tennessee banking franchise and our capital markets and intend to be very aggressive in growing the Tennessee franchise, acquiring new customers and finding new opportunities within the business.”