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VOL. 132 | NO. 75 | Friday, April 14, 2017

First Horizon Reports Busy, Profitable First Quarter

By Andy Meek

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First Tennessee Bank’s parent company kicked off 2017 with a busy first quarter, a period in which the company saw net income growth of 13 percent, an improvement in deposits and loans, a 29 percent boost to its dividend and the closing of a key acquisition.

Bryan Jordan, chairman and CEO of First Horizon National Corp., told analysts Thursday, April 13, the company is pleased with the results and that “2017 is off to a good start.” Part of the foundation for the quarter’s results, Jordan explained during a diversion into macroeconomics, was the health and direction of the economy.

“We’re reasonably optimistic for 2017,” he said. “The economy in our view is still very much like it has been for the last several years. It’s growing at a modest pace, somewhere in the 1.5 percent to 2 percent range, in all likelihood. Trends seem to be positive.

“In all likelihood, we do expect the Fed will raise rates much like the market does a couple times over the remainder of the year. In our view, to break out of this pattern we’re going to have to see some legislative victory. Taxes, regulation, things of that nature, which are really dependent on Congress and the White House being able to enact some of the president’s agenda. In the absence of that, we think the economy will continue to chug along.”

Among the results First Horizon reported:

• Total revenue growth at First Tennessee rose 9 percent, outpacing expense growth of 2 percent. That also helped the bank improve its efficiency ratio, a key banking performance metric. It’s basically calculated by dividing expenses by total revenue, and during the first three months of 2017 that ratio for First Horizon was 72.4 percent – meaning the company spends about 72 cents to make a dollar. That’s down slightly from an efficiency ratio of almost 74.4 percent in the year-ago quarter.

• The company grew its dividend to 9 cents per share, a 29 percent increase.

• Average loans were up 9 percent during the quarter. The company grew its average deposits 14 percent.

• At the company’s fixed income unit, it closed on the acquisition of Houston, Texas-based Coastal Securities, a national leader in trading, securitizing and analyzing Small Business Administration loans. That expands the unit’s existing SBA trading activities and establishes a fifth major trading desk.

In other results, First Tennessee West Tennessee president Bo Allen says lending is on the rise, especially for business and commercial customers.

“Deposit balances in all of our lines of business, including commercial, private client and consumer banking, are up year over year,” Allen said.

The company’s allowance for loan losses in the first quarter stood at almost $202 million, down from a little more than $204 million a year ago.

“We saw good loan and deposit trends,” Jordan said about the first quarter. “Our pipelines remained strong as we wrapped up the quarter. We did see some expected volatility in our mortgage warehouse lending business. Our fixed-income business was a little soft in the quarter. We saw the business tailing off a little bit as interest rates spiked following the election. Credit quality throughout the quarter was strong.”

PROPERTY SALES 76 133 1,342
MORTGAGES 83 131 1,047
BUILDING PERMITS 190 277 3,028