First Horizon CEO Bryan Jordan says he refuses to lower underwriting standards to match rivals’ loan growth, expressing optimism about credits in the works at the Memphis, Tennessee, company.
Loans grew by 1% at First Horizon in the third quarter compared with the prior quarter, excluding Paycheck Protection Program loans.
The $88.5 billion-asset company is looking to “protect the integrity of the balance sheet” by avoiding stretching its credit quality standards in a “very, very competitive” market, Jordan said Wednesday in response to an analyst’s comment that First Horizon’s loan growth was weaker than that of other Southern banks.
Many banks and nonbanks are being aggressive on the price and terms of loans, and First Horizon is being “selective” in its approach, Jordan said during the company’s conference call to discuss quarterly results.
“I'm not close enough to others' results to have a sense of what drove their growth, but I'm encouraged about our ability to grow loans in a quality fashion,” Jordan said. The company does not “get fixated on setting a number” that it needs to meet, he said.
Jordan was reacting to a question from Keefe, Bruyette & Woods analyst Brady Gailey, who listed Synovus Financial and Pinnacle Financial Partners as two examples of banks that “are putting up notably higher loan growth.”
First Horizon’s loan commitments rose 5% compared with the second quarter and are “spring-loading the balance sheet for future growth,” Jordan said.
Customers’ excess savings and early payoffs of loans — especially in the commercial real estate sector — are denting loan growth, Jordan said.
First Horizon also faced questions on its ongoing integration of Iberiabank, which has proved to be
Last month, First Horizon said Hurricane Ida’s impacts prompted it to delay the system integration with Iberiabank and rebranding until early next year. But executives said they are hitting key milestones, such as completing the conversion of its wealth, trust and credit card businesses.
Steven Alexopoulos, a JPMorgan Chase analyst, said on the call that there is “still quite a bit of wood to chop” on the merger and asked when the company will turn its focus toward playing offense.
First Horizon will start to see significant benefits when the systems integration is completed in February, and cost savings will pick up in the following quarter, Jordan said. But the bank is already seeing some revenue benefits from the merger stemming from commercial lending, mortgage and wealth customers, executives said.
First Horizon is hiring bankers to pursue new business and recently hired a new leader in the Dallas market, Jordan said.
“We're very much front-footed, and I think you will see that momentum start to build over the next couple of quarters and into ‘22,” Jordan said.
First Horizon’s net income available to common shareholders fell to $224 million, or 41 cents per share. That was down from $523 million, or 95 cents per share, in the same quarter last year, a figure that reflected the Iberiabank merger and the acquisition of 30 Truist Financial branches.
