First Horizon CEO Bryan Jordan said he refused to lower underwriting standards to match the growth in loans from his rivals, expressing optimism about outstanding credits at the Memphis, Tennessee company.
Loans increased 1% at First Horizon in the third quarter from the prior quarter, excluding Paycheck Protection Program loans.
The company with $ 88.5 billion assets seeks to “protect the integrity of the balance sheet” by not stretching its credit quality standards in a “very, very competitive” market, Jordan said Wednesday in response to the comment. an analyst who said First Horizon’s loan growth was lower than that of other southern shores.
Many banks and non-bank institutions are aggressive about the price and terms of loans, and First Horizon is “selective” in its approach, Jordan said on the company’s conference call to discuss quarterly results.
“I’m not close enough to other people’s bottom line to have any idea of what drove their growth, but I’m encouraged by our ability to increase lending in a quality way,” Jordan said. The company is not “set on setting a number” that it has to stick to, he said.
Jordan was responding to a question from Keefe, Bruyette & Woods analyst Brady Gailey, who cited Synovus Financial and Pinnacle Financial Partners as two examples of banks that “are seeing significantly higher loan growth.”
First Horizon’s loan commitments were up 5% from the second quarter and “top up the balance sheet for future growth,” Jordan said.
Customer excess savings and loan prepayments – especially in the commercial real estate industry – are holding back loan growth, Jordan said.
First Horizon also faced questions about its ongoing integration of Iberiabank, which turned out to be more expensive than the companies initially estimated. But Jordan said he expects spending to moderate in the current quarter and remains confident the merger – which was completed in July last year – will result in at least $ 200 million in annualized net savings by the fourth quarter of 2022.
Last month, First Horizon said the impacts of Hurricane Ida prompted it to delay system integration with Iberiabank and rebranding until early next year. But executives said they were taking key steps, such as completing the conversion of its wealth management, trust and credit card businesses.
Steven Alexopoulos, an analyst with JPMorgan Chase, said on the call that there was “still quite a bit of wood to be cut” on the merger and asked when the company will focus on attacking play.
First Horizon will begin to see significant benefits when the systems integration is completed in February, and the cost savings will increase in the following quarter, Jordan said. But the bank is already seeing benefits in terms of merger revenue from business loans, mortgages and wealth customers, executives said.
First Horizon is hiring bankers to pursue new business and recently hired a new market leader from Dallas, Jordan said.
“We’re very advanced, and I think you’ll see that momentum start to take shape over the next two 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 merger of Iberiabank and the acquisition of 30 branches of Truist Financial.