Yields do continue to improve nicely, with overall loan yields up 167bp yoy and 77bp qoq to 5.12%, commercial loan yields up 203bp yoy and 93bp qoq to 5.4%, and core C&I yields up 77bp qoq to 5.12%.Ĭredit is okay. ( FNB) are likewise pushing hard for growth in the region. Given generally positive commentary from other banks operating in the Carolinas, though, it does make me wonder if First Horizon is seeing more competitive pressures here I know Pinnacle ( PNFP) has grabbed several loan officers from First Horizon and banks like F.N.B. Mixed Balance Sheet Trends, But A Respectable Funding Positionįirst Horizon’s roughly 1% end-of-period loan growth was not all that impressive compared to comparable banks this quarter, including better than 2% growth from Regions ( RF) and Synovus ( SNV) and better than 3% growth from Truist ( TFC).Ĭore C&I lending was up about 2% in the quarter, with management calling out healthy asset-backed lending and Florida and Tennessee markets. Pre-provision profits rose 56% yoy and 6% qoq, and First Horizon did a little better than I’d expected here, helped by that operating leverage. Management tagged cost synergies from the deal at $200M in the quarter, suggesting around 10% outperformance relative to management’s initial expectations. Operating expenses declined more than 3% yoy and rose about 3% qoq, with the efficiency ratio coming in below 52% - a marked improvement from the mid-60%’s before the IBERIABANK deal and the 70%-plus results from roughly a decade ago. In both cases these are cyclical shifts in the markets driving weaker results, though the fixed income performance here was softer than for the giant trading banks ( Bank of America ( BAC), et al). Net interest income rose almost 42% yoy and 7% qoq, with strong net interest margin improvement (up 147bp yoy and 40bp qoq to 3.89%) offsetting weak earning asset performance (down more than 4%, and with Texas Capital Bancshares ( TCBI) one of the weakest results of the banks I’ve examined this earnings cycle).įee-based income fell 30% yoy and over 4% qoq, with fixed income trading results down 24% qoq and mortgage banking down 56%. Revenue rose about 18% year over year and 4.5% quarter over quarter, just topping expectations (and beating my own expectations by a bit more). Numbers are presented on an adjusted basis and will vary a bit from reported results. Good Spread Performance And Operating Leverage In The Fourth Quarterįirst Horizon executed relatively well in the fourth quarter, though it was far from a perfect set of results. With mortgage banking and fixed income trading unlikely to be strong in the near term and more challenging lending markets, I don’t think First Horizon would find particularly positive sentiment, though there is a solid core to support valuation. Were the deal to fall apart, there would definitely be downside risk for First Horizon shareholders. I continue to expect that the deal will ultimately be concluded, but regulatory clearances are taking a while – it took 13 months for Bank of Montreal ( BMO) to get approval to acquire Bank of the West, 16 months for Umpqua ( UMPQ ) and Columbia ( COLB ) to get final approval for their merger, and 19 months for New York Community Bancorp ( NYCB ) and Flagstar, and we’re “only” 11 months distant from the initial deal announcement for TD and First Horizon. The key to First Horizon’s valuation remains the approval and closure of the pending acquisition proposal from Toronto-Dominion Bank ( TD) (“TD”). Unlike many, if not most, large-scale bank transactions, it looks as though First Horizon may actually be exceeding initial revenue and expense synergy targets, and that’s coming in handy now that fee-generating businesses like fixed income trading and mortgage banking are struggling. It has taken a little longer than shareholders would have preferred, but First Horizon ( NYSE: FHN) is starting to show real evidence of the promised benefits from its merger with IBERIABANK back in 2020.
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