Lending at First Horizon has been sluggish during the pandemic, but the Memphis, Tennessee, company says momentum is now strong, partly because more people and businesses are relocating to its markets in the South.
“Our markets are very vibrant,” Chief Financial Officer Hope Dmuchowski told analysts after the $89.1 billion-asset bank reported its quarterly earnings.
First Horizon’s total loans stood at $54.9 billion in the fourth quarter, which was down roughly $3.4 billion from the same period a year earlier, reflecting industrywide pressures on loan growth during the COVID-19 pandemic.
But the bank recorded a small uptick in commercial lending compared with the previous quarter when excluding the impact of Paycheck Protection Program loans being forgiven.
Commitments for commercial loans grew by 8% during the quarter, which First Horizon President and CEO Bryan Jordan called a “spring loading of the balance sheet” that will drive future growth.
First Horizon is seeing benefits from being in 15 of the 20 biggest metropolitan areas in the South, Jordan said.
The bank’s branches were previously clustered in Tennessee, North Carolina and South Carolina, but a 2020 merger with Iberiabank gave First Horizon a larger footprint in areas like Atlanta, Florida and the seller’s home state of Louisiana.
First Horizon also expanded its presence in North Carolina, Virginia and Georgia with 30 branches it picked up from divestments tied to the merger that created Truist Financial.
“I'm confident that we are well on our way to becoming a top-performing regional bank,” Jordan said.
First Horizon’s net income fell to $219 million, or 40 cents per share, during the fourth quarter of 2021, down from $234 million, or 42 cents per share, a year earlier. Excluding the impacts of the merger, the bank’s full-year net income nearly doubled.
Executives
There is a natural “inward focus” during a merger as bankers work to transition clients to a new system, Jordan said. Still, he said he was “really excited about the momentum we showed” in commercial lending.
“I'm encouraged by that momentum,” Jordan said. “I think that will continue to build, as we see further strengthening in the economy, as we see the receding of the omicron variant and hopefully lesser impactful waves as we go forward.”
