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VOL. 133 | NO. 76 | Monday, April 16, 2018

First Horizon Starts Off 2018 With Strong Q1 Results

By Andy Meek

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The first full quarter with Capital Bank integrated into the operations of Memphis-based First Horizon National Corp. saw a pickup year-over-year in several key areas like loans, deposits and growth in net income.

First Horizon, parent of First Tennessee Bank, reported $90.6 million in net income for the first quarter, up from a little more than $54 million a year earlier. First Horizon, which closed late last year on its $2.2 billion acquisition of Capital Bank – the largest in its history – also saw earnings per share up 17 percent to 27 cents from the first quarter of 2017.

The results come at a particularly consequential time for the Memphis banking giant, which will hold its annual meeting of shareholders later this month and which, thanks to the Capital Bank merger, is now a $40 billion organization with more than 300 branches throughout the Southeast. Also in recent days, First Tennessee Bank and Capital Bank announced the launch of a five-year, nearly $4 billion effort to expand the availability of financial resources in low- to moderate-income communities across an eight-state footprint.

That plan includes mortgage and small business lending, community development lending, philanthropy and spending with minority-owned suppliers and marketing firms. Expanding physical access to financial services in low- to moderate-income communities is also part of the push.

As part of its first quarter earnings, meanwhile, First Horizon touted the Capital Bank merger as already contributing to overall earnings. The merger is on track, the company said, with cost savings and revenue synergies, and the systems conversion is set for later this quarter.

“First Tennessee and Capital Bank employees continue to deliver exceptional, differentiated services and solutions to our customers, and our preparations remain on track for the integration of Capital Bank in the second quarter,” said First Horizon chairman and CEO Bryan Jordan. He added that the first quarter results, among other things, have him already “optimistic” about the rest of 2018.

First Horizon’s regional banking unit First Tennessee saw average loans and deposits both grow during the quarter by 50 percent and 38 percent, respectively.

The bank also whittled down its efficiency ratio a bit during the period. That metric is calculated by dividing expenses by total revenue, and the figure was 54 percent at the end of the first quarter, meaning the company spends about 54 cents to make every dollar.

That represents an improvement from the company’s efficiency ratio of 59 percent one year earlier.

Another key metric that’s improving is the bank’s provision for loan losses. That metric reflects the amount that banks reserve to cover losses they forecast in their loan portfolios.

When banks bring that number down, it suggests they’re increasingly confident about market conditions and borrowers’ ability to repay. First Horizon brought that number down 7 percent during the first quarter, to more than $187 million, compared to almost $202 million during the year-ago quarter.

The bank, meanwhile, is likewise growing closer to home, in Memphis and West Tennessee. That’s according to Bo Allen, West Tennessee market president for First Tennessee, who said the bank kicked off the year here with “great momentum.”

“We experienced a strong first quarter, growing our loans and deposits, and our bankers remain committed to offering exceptional service to all our customers,” he said. “We look forward to what we believe will be an exceptional year for our customers and our company.”

PROPERTY SALES 57 280 1,209
MORTGAGES 55 244 916
BUILDING PERMITS 158 699 2,751