VOL. 132 | NO. 3 | Wednesday, January 4, 2017
First Horizon CEO: 2017 Brings ‘Good Growth Opportunities’
By Andy Meek
A week ahead of his bank’s earnings presentation to analysts – which will close the books on 2016 with a fourth quarter and full-year report – the top executive at First Tennessee Bank’s parent company is in an optimistic mood.
Bryan Jordan, CEO of Memphis-based First Horizon National Corp., told an industry crowd in recent days that First Tennessee sees “good growth opportunities in our footprint.” He thinks the economy should also help provide a lift in 2017, and sees banks and regulators settling into a more certain post-Dodd Frank relationship that he expects to evolve into more of a “lighter touch” from regulators.
Those were some of the insights he shared at the recent 2016 Goldman Sachs Financial Services Conference in New York. Jordan was introduced to his audience by a conference official who told the crowd there’s probably no single bank in Goldman Sachs’ coverage “that’s done more to improve its earnings profile than First Horizon this year,” largely as a result of two acquisitions that made 2016 a consequential year for the company.
Those included the acquisition of Houston-based Coastal Securities Inc. – a national leader in the trading, securitization and analysis of Small Business Administration loans – by FTN Financial, the capital markets business of First Tennessee Bank.
First Tennessee also expanded its restaurant franchise finance business in 2016 with the acquisition of about $637 million in restaurant franchise loans from GE Capital.
First Horizon is announcing its fourth-quarter and year-end results on Jan. 13. Zacks Equity Research is calling the stock a “must buy for investors now,” citing reasons that include the bank keeping a lid on costs and making big strategic moves like the recent acquisitions.
Boosting the company’s dividend and stock buybacks are among the positive surprises for shareholders that could also be on the table in 2017. Jordan hinted as much at the Goldman Sachs conference, explaining the bank’s philosophy about excess capital and not feeling the need to horde it.
He doesn’t believe FHN needs to keep excess capital in the business for an undefined opportunity that may or may not be around the bend.
“If we have excess capital, we want to get it into shareholders’ hands,” Jordan said.
His is not a particularly exciting formula. But it’s a familiar language spoken by a former chief financial officer – Jordan was the CFO at Regions Financial before coming to First Horizon. The formula is to keep watching costs; focus on efficiency and productivity; and be “easy to do business with.”
He expects his company will continue on an upswing and ride the crest of a stronger economy in 2017 once new leadership in the nation’s capital settles in.
“I admit to being somewhat Pollyanna-ish before the election,” Jordan told the Goldman Sachs crowd. “Whether Clinton or Trump. Just given the nature of the country, the mood of the country and in some ways sort of the dialogue we’ve been having for a year-and-a-half, that either of them would have taken an approach around taxes, regulatory and infrastructure investment and things of that nature and we’d see pretty strong economic growth in 2017 … Our plans would say we expect to see high single-digit growth opportunities in 2017. And we said coming into the quarter our pipelines were at an all-time high.”
At the end of December, First Horizon shares were up around 40 percent for the year. According to Zacks research, expenses at First Horizon fell during the first nine months of 2016 where they had increased year over year in 2015.
Process improvements and branch network optimization were cited as reasons that expenses decreased.