FHN - Earnings call transcript Q1 2018 | First Horizon Corporation

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Operator

Good morning and welcome to the First Horizon National Corporation First Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to conference like Bowman, to now Relations. Investor would turn over the Aarti I ahead. go Please

Aarti Bowman

reports. on Debbie. you, supplement use are In of presentation financial that at site and we'll Relations www.firsthorizon.com. earnings non-GAAP posted annual call, our call Web for reasons of this a Thank in and results materials our differ recent information. our note most and slide will Please the quarterly we this forward-looking Investor from may section and number outlined Actual the earnings release, mention the information in forward-looking

Our is remember we in The and CEO, forward-looking record to call. to reconciled of in statements our Jordan; non-GAAP site web reflect Also, not in them. materials on and our earnings cast materials. the views our slide Web such today, this update CFO, authorized as Losch. GAAP our information are include is and Bryan those only presentation speakers information for identified that this the and BJ is morning's please call, obligated this This our

Springfield Chief over be Officer, to Susan turn BJ will I'll our Additionally, and Bryan. available with it for questions. Credit Bryan now

Bryan Jordan

our close little completing the and a remainder the to year, which touch to you and results quarter we Aarti. everyone. you, going morning second the momentum we excited is good come and into in later. the joining saw I we see very Thank about of the I Good XXXX us. bit off as am Thank pleased on the a integration, start, for with first quarter will

and activity good good saw we and quarter, customer the underlying sheet our balance statement. activity income During economic

but will about partially merger. by quality margin trends, during Bank were sheet partially the the by it, quarter. including and talk BJ net good of impact Capital rates improved, was Our the interest rising credit more our balance

bonefish minutes. I exceeded both for we that to nine after in am begun of years capitalize on equity our touch continued we on on be and on next pleased, an quarters, the and the on merger XX% economy our again credit return of think outlook and I the a in quality. and revenue we will several area strong that couple have for good target given of synergies, can quarter, north We expense, hit the That's adjusted ROTCE. that

We of like think be the in several to more we but in the FOMC benefit year. XXXX. quarters We over time We economy early, what at have the significant, this any still and raise looks to [indiscernible] have much does or avoided at on will the the impact rates, customer continue tariffs. different don't regulation expect, underlying view the likely we economy the a lot to of it this the next customer that reduced affecting as Reform year this whole look and of The continue seem it's in two while year, to to into market very not positive in point activity. don't see from we It see is effect Act, there Tax minimal. our expected remainder expectations, or sentiment, confidence be point, could

and XX% As impact in progress already integration And on well. some still first that. is minute BJ seeing cost good we merger and mentioned There touch making revenue of ago, as year. synergies. to our are are will this I on capturing expect a We saves and realize the synergies we quarter, our

of a and late a tremendous integration prepare teams May our customer Our job really timeframe. fantastic amount conversions, to for quarter, done conversions later work have this

the an On far, our process sales bankers conversions only side, customers have look work, May, tremendous training, reaching to going and have basically, conversions. our we to turned to preparation the system those adverse going helping in or into And for We enough, out several XX,XXX not that impact but them amount are talking additional an through cross are looking forward through, a contacts and preparing to minimize understand them done consumer those for interestingly of them of with in we our so effort have of communication, written integration. and made over opportunities. customers,

it's customers. you when always So your a to good talk sign

the optimistic and we year, of So the our of in We planning conversion remainder think about the on summary, we to coming over the track perform integration this optimistic going into very-very about that are XXXX. remainder business are is up. well the year,

to and stop and back it come will to will we turn questions BJ, later. I that, then with over So

BJ Losch

of the expense I Thanks adjusted start quarters related right. strong trends, believe, an quarter for of in slide net benefit we property million X; first will Notable were income $XX due good All $X.XX gain Capital stable interest from Bryan. quite basis. EPS XXXX, acquisition the or expense to $X and million reported deal, we from ongoing on results, a reflects asset full Good quality. Bank on The everybody. $X.XX trends the a quarter morning positive sale. discipline, in and items a and

more to turn the strategic would achievement value. Capital financial When deal the X, an with first on today we slide very accelerate the targets bonefish performance XXXX, of remain Bank pleased deal, basis we adjusted it to of expect that continue. to about end and original and like bonefish the we all achievement its we of year, feel said, we the assumptions, by announced targets of you if quarter of in our Today our XXXX. our confident we relative that and show anticipated last even Bryan Now

customers early significantly results But Continued and from with coupled we victory, employees. taxes Bank are making well First added and we of and our smooth ones our XXXX, committed latter benefit going had profile. that and conversion and far and second remains lower our declaring Bryan our in quarter for from systems integration, on the the alluded to a positive interest are to, of Tennessee business as the higher is rates, transition the for of return part strong profitability Capital track enhanced

months million, higher half be quarter our process of the benefit four in on of XXXX. the save next full years. since and in first We And the track our of run to November, realized only deal to revenue at over $XX million $X after million far, about consummating the of $XX cost target achieve roughly by rate closed annualized the end XXXX, amount few that $XX in with expect are of goal versus to of we million or also have we synergies so

Bank up, XX of quarter the a of full interest points, the the Capital net basis of short of XX impact points enhanced both Moving loan driven the well by rates. X; Capital on and was slide from a to rate NIM up were the our sheet, net NIM Loans XXX combined and In basis further as XQ quarter We and XXXX, XXXX. reported interest the in Bank. impact XQ term increase saw basis points. accretion income hike, margin the basis full a as increase from point balance by X and accretion,

growth slide starting Tennessee healthcare. with loan asset slides, growth let's saw next product line based West with Tennessee, in in Texas, specialty the loan markets we growth deposit trends; areas, based and X, lending as at such such few and and to lending loan on broad Middle look as Turning

the had that growth disciplined side was we business. companies made of seasonal While left loans market reflecting grow share year-over-year XX%, high, on business in Competition a a have we profitable continue significant manner mortgage decline, and the to remains balance in sheet. and gains the our but in

of deposit relationships hike overall mix Moving growing time. our and quarter deposit on deposits, and on in consumer cycle our X; of us and from XX% consumer focused this we customer our beta a improving of both deposit first beta and are excluding the base our rate slide over to our franchise deposit commercial solid base is side, provides third our market the XX%. From and commercial index XXXX, on

base others the that far, deposit cycle rate likely competition. historically reaching we up, as so the And we to will with heat afford have and our markets significant to be pricing, aggressively existing an may plan seen Carolinas Florida us acquire inflection such competition industry, commercial relationship competition services the low as remain and deposit in new clearly deposits presence strong So our cycle, the continues in both in point that expanded to focused through on Like offerings. grow newer we opportunities protecting with and and consumer our treasury we increase. relationships, deposit believe

quarter. charge-offs our ratio trends overall basis asset credit slide Net in excellent. million was at of flat remain the with the to Moving points, to quarter. XX an the on The just roughly in were $X allowance million quarter, [indiscernible] $X XX, fourth credit quality loan at to on

Wrapping targets to announced banking as performing the is portfolio us term, at XX, on up in near we was slide as XXXX, in environment early Bank and industry that Capital benign. credit in bonefish original a expect the for the very time uncertain Our a expected, whole. we remain our

as performance an targets. last continued rates, various have opportunities environment, delivered put and us few economic said, with to at healthy growth our have job, positive years a done position strong our next leaders metrics. across excellent over Our bonefish performance regulatory aspirational a we and tax the employees above coupled credit years, today, tailwinds, our the a over in such expect those a rising the to in balanced Bryan strengthening with several benign continue And reform, on as a or outlook, agenda, franchise, result as to

will ability consistently performance whatever do we We deliver are control well can to are positioned forward we control, so. and confident top going environment operating to in our what be we quartile in face, and goal our to

I over will turn back Bryan. with that, to it So

Bryan Jordan

first with BJ. in the am quarter. results I you, Again, the Thank pleased

Our the bankers, integration. progress great on and teams operation technology are our making

be calling customer very-very activity, to efforts, Our continue good.

term. the Many they and it will want we the well over a the returns industry way our deliver are and and with for working our will think the leading grow to take sheet are this the customers. the long take and us thank disciplined this of and in them opportunity employees hours, doing. doing long impact minimize very-very profitably, I very across that to nights that prepare organization weekends, on I for balance to strong integration, opportunity work positioned great

Debbie, take you questions. you things thank are will doing. we that great now any the And So for with that

Operator

Instructions]. [Operator

Alexopoulos JPMorgan. Steven from with comes question first The

Steven Alexopoulos

Hey, good morning everybody.

Bryan Jordan

Steve. Hi

Steven Alexopoulos

that on reaching wanted to comment, BJ, leading to deposit to seeing you be costs us you are inflection that's exactly the BJ's what could you point. tell follow-up first conclusion? appear I

BJ Losch

Yeah so, morning. thanks good Steve,

in well last, a So we significant what have I'd expectation anticipated, the benefits pick may or months, more rate the reform, market the over seen relationship say, the competition. and as have rates, up maybe of of four and a but of commercial well It in combination with three as moves maybe lot than deposit offers, tax branches exception side. it in been pricing pricing our been base into various posted the hasn't has walking a on of people as as necessarily

we then very to the so, markets, these serve the customers new grow active Carolinas opportunity in growing that pricing. with base. time like over ourselves to we plan build relationships quite to don't well. We have in and that as take deposit And will acquire share the approach that, we we bank, continue in also protecting take our And new a out can and and where and Tennessee, really go meaningfully the and we or we customer do a relationship particularly Florida, fairly with deposit will business, consider our appropriately and

Steven Alexopoulos

the on in And buckets, how about up scheduled two and XQ the BJ, accretion? comments, you core then following really NIM NIM in the and deposit thinking are

BJ Losch

Sure.

clearly So of what a the our we to a scheduled going out have NIM accretion, to the and point relative made that break so to organic accretion. view is performance could people core it be,

and I have that, accretion, every etcetera, over flows time. decline think speaking, reforecast expected as quarter-to-quarter based repayments, accretion to on generally will and cash know, you we quarter like

as left the because from pricing sensitive, But a terms rates, several of on of we floating be defend our will think in impacts also of asset we to So still our of balance mindful couple of a book. benefits what next protect, quarters. deposit deposit will that and still I quarter, just million rising base. very terms the in NIM, are organic we grow expect side of maybe we decline, discussed quarterly the sheet, our to see But over well, by rate dollars, on

expect I confident will we both we are So that so but those modestly manage get can will it of that manage better, But very continue NIM our closely. well. to

Steven Alexopoulos

what little they taxes loan helpful. was with you Are a do appreciated? will of they expanding? Any soft bit look quarter. color customers That's if down doing the paying I Okay. shift now? gears, in the loans, wanted lower to are be benefit so Bryan, at commercial you see growth, it C&I your

Bryan Jordan

and customer bankers Yeah franchises are strong. in aluminum that characterize see economy We'd related we say of would optimism the customer There the in see But bit of I Steve, is calendar very let as pulling not versus people, to the and two customers would big seen tariff and or strong our balances tax add and have balance activity overall, from well. and is because to forward. and at businesses that and the we generally a example. economy, the contacts, we still with Susan outlook. that's a would in down results as my little that qualified say, would and XXXX for trend about so as improving that good. carrying some deposit still Then XXXX people late a see They price optimism positive. very overall time I been the financial investing the economy hit I heard looking that a strengthening. sheet shift, overall But a being sign I are will has I I activity, a are hire the of across sensitive, the that being as or taxes continued looking of issue, we have stronger. characterize year, steel mentioned

declining growth mortgage think, the finance activity, while by was offset quarter. sheet balance we seasonal tends the in which warehouse largely be to first So

pipelines beyond. Susan, add? about to XQ the optimistic you anything are outlook We and for and want

Susan Springfield

Mid-Atlantic. quarter, will There and loan, compete there, structures, some those term not, but we roll we lending, out off. average placement last markets. I competition growth as private a in as when quarter. also But core largely but The it's quarter-over-quarter the being will pretty would period out and asset add the our Middle end, feel noisy. also franchise were basis, payoffs few side. period end, with a and can core West is few we M&A them, in well We bit quarter-over-quarter good finance, merger this several things. we are opportunities did M&A, let on that seeing commercial have BJ little very earlier, saw we putting non-bank some based with in the growth, -- if be a Bryan on mentioned good The Tennessee across

we In West same we And in saw activity the this legacy addition for finance, Tennessee, First up were the first from Tennessee production, quarter for Capital, and of in Mid-Atlantic, asset franchise actually good XX% year, Tennessee both Middle last year. terms of Legacy and quarter new new production, Healthcare. over based, also

we to feel for it are relates we loan where good So very positioned, growth. about the as outlook

Operator

Brady Gailey next The from question comes with KBW.

Brady Gailey

morning good Hey, guys.

Bryan Jordan

morning Brady. Good

Brady Gailey

some X.X of last talked you seems CBF and are XX% plus. little that moved rates the tax the have those be well on to X.X this know going cost kind of your slide the still have XX%, quarter, like guidance, you you of bonefish and up, the then higher? middle about XX, already with targets then, already could we of I are are are and a you it higher They push I on out. bit reform, specifically the you have and but and So mean, remain ROA to in ROA that over unchanged, like, laid saves. ROTCE, ROTCE right

bonefish, and and metrics updating longer are those wondering, just all those on two are term? thinking if about thinking targets increasing you So about how you the maybe

Bryan Jordan

is this Brady, Thanks Bryan.

And after points going a I make pointed am I hit them it. out, about we just this of to couple nine quarter. years, As

tried And to several and a primary very and out, many if some I a was And it bonefish, of I give long Really, you merger sense earnings thought the over we to a in question, what we term. give tell sense of BJ -- our integration, what couple to was asked from been lever do and it, use power the been things. and goals that, You would to margins to franchise of the kind good our we we has you ways. risk create about wanted things have nine what pointed years. we bonefish profile, would and we for the credit profitability. to step back you you focus give there both out are you how on And do of was much or we sense risk to with capital, take, of how and the going expected returns into some were these

those XX% were wrote there we a had may less was probably when period, ROEs back those many XX% originally and we to levels. You industry profitability and targets we the about optimistic bonefish recall, getting out, to where others

thing. think customer day the bonefishes a bonefish. or use It whether is a how whether we business, verb risk that our been be out, higher bonefish pointed economic through point, interest by day they and would talk become reform, at you higher that's about relationships team cycle, and a further the say and think, transactions. we the I about reward, by in BJ And As targets all and finance of our bonefish by positive tax tool how how really they profitability, price doesn't impacted our has job, out, business it in, will the And and that manage bankers, have great costs. I will that, have to we bonefish impacted people the they and a think done rates, through something using some impacted leaders organization. about real credit and be

have have of for we it the from priority plus. XX% following look hasn't a today the we adjusted the tuning, XX%, question consistently, couple once said XX% to a thoughts, I and reasons. at we One, been said I As fine of

value, at And drive in that we the risk terms organization, profile return that look long a way that maximizes term. to way profitability. think we shareholder activity the as is, So floor value we XX% over don't at two, in to we that we the ceiling, a the that the maximize the as and in that articulated. look the greatest to given can, that of is businesses, about a And have and do

to talked that's addition I about have management decision while a tool tool it's bonefish So a in as for used the making, others.

Our business next their do years. five, the the they over leaders about six consistently, think double of franchise value how

So feeds a that as we use tool that data.

And But point, ROTCE can, a this scale right push so, in out, have a that we good strong ROA on in can out feel and don't to outlook return and we like whether energy and floor, as put future, up not and foreseeable ceiling, is we likelihood, change higher drive a at our be sounds not, we adjust those are not to economy much we and lot there very out. risk is of we have a given going or that the high you into, go outlook the on as given because our we it's that think a goals, as the tolerance. laid the need that to it your what point now again, teens articulated

Brady Gailey

know to about single away, high talked a loan the range. loan have of loans then, that XXXX? still even mortgage in bit. feel the digit XXXX strip the kind seasonality the you Does into of appropriate term, growth of you for that little warehouse mid impacted were period rest know down and growth, if end I I balances. And Okay. But on longer

Bryan Jordan

the general, and lot we part form dedicated. planning, I'd as limit, policies a way the making doing look integration way of answer, at the and shifts portfolio can got portfolio our and say what activity terms and and go we yes in we we through the we are our is are management of in activity of we also

loan had encouraging. well, pretty activity, I that is but Susan as say, the articulated, some franchise thought, impact marginal I'd on the So across activity has

buying in that think, the finance warehouse move seasonality and you occurs. up, mortgage see I So business third activity as improve quarters, the and our when second home will and

us digits growth. so, think terms I'd will say I sort mid-single -- of you see of loan in just

Brady Gailey

for And conference million right. -- know BJ, one think All good this of be you last then $XX call, last I I number a would yield accretion year. mentioned for me,

on levels $XX You have taken in around year? million accretive are XQ. just you yield thinking how almost half that, update about this Maybe an

BJ Losch

Yeah.

and think, tell more in accretion, based So have as you rates bit quarter, accretion again, have what did I to the at that's aggregate at you cash estimate next loan doing little quarter, than and we the them the with estimate accounting that, prepayment book would I what said we purchase etcetera. trying flows purchased, several by the would a beginning, first and on I over are looking thought. years,

So post to it those a on going are post so you get have really think and how good deal I takes on. marks, cadence much a to and a quarters, couple accretion and when

And obviously little we quarter. the than bit more end a expected we so, at fourth the this would what quarter, have of had

to our handful as expectation over again, But go start to quarter, XXXX, be think as have flows cash generally those sure. I would again, recast speaking, for to $XX it it quarter million starts a will of several that. look off, that more the next to But, ahead. will millions run every down than will we will quarters, again, for We we every

Brady Gailey

guys. Thanks Okay.

Bryan Jordan

you. Thank

Operator

Ken The next question Stanley. Morgan Zerbe comes with from

Ken Zerbe

Thanks. Great. morning. Good

Bryan Jordan

Good morning Ken.

Ken Zerbe

increases. of some still if will, assumption? meaningful boost? edge cost deposit higher deposit mitigates a like you industry comments with or Just fair in the relationships. how are sort that -- guess, you that going can want deposit pricing? seems going of you deposit that made. that I impact increases if some is have It you sounds off, to Like, offset know I guess, your still increases saying, pricing, takes to it to the I -- more those, that costs, But it that the has to the deposit of end of Is me it back it's competition are you customer meaningful just a

Bryan Jordan

and competitively possible, Ken, of relationships customers, want all for we the costs also, with while start, making and for proud ability as treat acceptable the is and where I profit have that we to our we are shareholders. infrastructure our pay them that to as fairly of we think, optimizing

those all So of balance we things.

have we think a good done I to-date. job

was in will at, than And has deposit at has price of XXX job inflection do little we think terms if price increases, raising the competitive. basis actually an moves, look picked think XX, clearly, get a is we now, historically, I and up, we a was forward. that. competition it and getting I the prepared we going starts great points what points more been have at But will and there point first be muted seen could of basis that, since rates, We Fed more are XXX cycles. moves lower previous it are you for after that XX, of

whatever take need will so, we to we do grow And to actions so. protect our to deposits, and relationship

based price to that to. impact remains to good be, we because the in people how balance we as customer relationships aren't on do big have we be prepared serving simply So solid seen, and an sheet, will as much that, say will or exactly, job But excellent defend that customers. be it need extraordinary have

Bryan Jordan

is this Bryan. Ken,

out fair Just different last thought, a year have relative people what industry, but pricing, we deposit to the say of said, of -- is that of some all what articulated course way, that, over consistently, some a and as it, but created BJ very betas, I not the would expect is what lag I but that lag that that, lag well, slightly XXXX. of in of modeled may amount BJ as migrate think to

deposit still is. what pricing to We competition are sensitive

and sure, offering want we relationship position, be that and a we said, customers, As are that want our on price a where playing we fair we in competing are are based to make level field. competitively BJ we priced, to a to

we is bit that that captured are and a beyond. more all to is, drift in that little out rates to likely percolate competition start deposit lag was and really So articulating in is XXXX, as XXXX of some

Ken Zerbe

Great.

time? Okay, materially last asset that's if just, you your did to, just not, Bank sensitivity, can And then over remind or question, you it do helpful. us, Capital expect change Thanks.

BJ Losch

our round Hey BJ. asset There Ken, sensitivity. it were Yes, roughly as book was. legacy half as asset it's reduced the sensitive, figures,

a sensitivity. that that on on sensitivity and impact But that [indiscernible] balance does as well. see we we still give So you slide would Capital can dampen this X, you did sheet that balance asset the as include sheet, in Bank bottom, net expect

So if on kind you past it a based these were Bank, seen higher you, are shocks compare some would through I to to you remind would Capital graphs, also of But our impact. have without that modestly of Bryan the these seen or lags so, certainly cycle so point, this that far comes assumptions, and lag how as of and out, have said, we some -- could seen be on at some depending much higher lower.

Ken Zerbe

Great. All much. right. you very Thank

Bryan Jordan

Sure.

Operator

comes from Ebrahim question The next Poonawala.

Ebrahim Poonawala

guys. Good morning

Bryan Jordan

Ebrahim. Hey

Ebrahim Poonawala

on the a year? that up think going because be the was first guess, we to mortgage are about business quarter. that XX% it little year-over-year. challenged volumes question, mean, So Is in to warehouse. slowdown I wanted BJ, obviously how clarify first the the should re-fi bit of I for

don't we year? ahead too in the for just us, go of sure, expectation on terms make to business that So of want

BJ Losch

Yeah.

So XX% sure I yet. increase not am year-over-year declare I am ready fantastic, would that but be to

buying off fourth as They think, come build that would quarter. seasonality, to back I first in the in for those alluded the season which we Bryan business back. and to as and the and the same spring third expect we in the the second that the summer, have drop in into be seen will balances see earlier, past, we

could in folks originations look more the growth, expect competition in full XXXX business that believe see market across XXXX, that to to to industry we have see and of and has So heated year that, year we but because back down. a if significantly that a take step full we absolutely good you up, outstanding share done, at the great come time, when have our work earn you

So can quarter-to-quarter. pattern that growth, optimistic going seasonal but we follow that to we year-over-year it's see are

Ebrahim Poonawala

digit mid-single and real-time, I changes know loan higher to expect conclude, the digits, digits? in Fair not fair you double towards should single at overall to be least if but conclude, it growth, this -- where

BJ Losch

overall On warehouse --? the or mortgage specifically

Ebrahim Poonawala

On the warehouse specifically.

BJ Losch

Yeah, so. I would say

Ebrahim Poonawala

that what quarter. And, volatility for us be I accretive you know look the pricing Is mean, or warehouse? X.XX core this could loan is? at NIM some the yields name. I -- increased creates from think remind dilutive on balance at I the that going were about to When this to in we the

Bryan Jordan

be will It accretive.

BJ Losch

time, of you customers take advantage Yeah, portfolios. in our of if opportunities with mind, highest grow. yielding we accretive. to have in keep definitely and relationships got business, one that will It's -- But time customer to from we

So trying share. are market business, that of to part gain we

will to other aggressive be price, We and at we more times, won't. try on

So at But in is X% it where portfolio. the it lies. depends in on our terms on almost of just yields aggregate, opportunity

a one continue. the most from of commercial So to that and portfolios, we highest expect yielding perspective,

Bryan Jordan

that is job credit with while availability deposits, tool, lines for out. has the very-very deposit funding that does Ebrahim, their all do that business manage profitable very pricing with to this and grow that are work part, extraordinarily and team one utilization is It to efforts warehouse of a good relationships strong seen expand and in to high Bryan. Bob Garrett credit disciplined have on good and a we and the with such. return good and have great, including of business us, and business. deepen they the thoughtful customers. relationships those balancing is And And it really customers, of their team

margin, short, there. we to do be it our outsized see in if growth will So accretive

Susan Springfield

mortgage increase warehouse by And number did actually the about clients lending, XX% we year-over-year. in of

Operator

Jared Our Shaw comes Fargo. Wells next question with from

Jared Shaw

good Hi, morning.

Bryan Jordan

Good morning.

Jared Shaw

acquisition guess, cost that little seems the saves. of we to on the remaining a can year in for XXXX, bit expect CBF would little expected then, the and us we integration, saves, coming I the few quarters, integration the before just Can and what's it you timeline in those still Looking XXXX? a surprising, see next another systems still be at saw give the after over a cost how saves cost

BJ Losch

BJ. it's Jared, Hey

is up But, from million little is we it. saying saves, I million cost maybe think, I said still So announcement. expect $XX there is, so. apologize in $XX deal which I if at of how a we what misunderstanding were

rate quarter it of would XXXX, the all makes quarter in first run expect million if in by $XX in our We in half annualized rate, to numbers sense. the and and XXXX, run of be of that that first be

that that the we be such into XXXX. out expect the that we of by out run have cost December different rate all a deal said to efficiencies of expect So claim way, XX, XXXX, efficiency a we

Jared Shaw

your Okay, you. clarity. the markets looking to approach continued Are the space? capital and of on sort okay. capital business thoughts then, ADRs. pressure just Great. face changing the at to any there That's markets And good of Thank

Bryan Jordan

This is Jared. Bryan,

a We adjusting business couple in have that years. of really been for

over Part profitable tremendous significant and fairly and that some that more While it business But it's quarters is disappointing shifts make levels there think some some time. of the opening controlling the customer shifts existing but in activity a Coastal we up think is, of adjustments. in our business making customer of in being have is in additional and done, has time, the integration of for making product I Coastal on investments are about to and costs traditional about relevant a spent on that talking suite. that we also well, a this and we Bank. the the base, very-very cost. time most and making our ago and way good now, in so, track seen several also And are our But right additional think controlling tremendous activity, us we will opportunity services amount the opening year Securities, merger terms resulted has with with we gone for to merger we have products, future, their Capital of focus

running will pickup these Feds do as for to changes business begin at activity a XXXX, income it's we it fixed some, that we and the optimistic the policy profitability cycles, are look we we difficult that neutral be remainder think can that we though, and will that. make lowering, that more the improve that and are markets in stabilize or to of that cycles, rates, the raising will for that rates on So and that the that expect positioned well relative

Jared Shaw

to in just though, expense get looking continued growth that control? to better revenue, are profitability you for not So

Bryan Jordan

Absolutely. Yes.

Jared Shaw

you. Great. Thank

Bryan Jordan

sir. Yes

Operator

comes SunTrust. with next from question Demba Jennifer The

Jennifer Demba

Good morning. Thank you.

Bryan Jordan

Hey Jennifer.

Jennifer Demba

And in income of us just first Two could fixed you could are point? this investments on Bryan, you profitable? you guys M&A your you to update elaborate on all, second, making questions; interests the and relevant future make at more

Bryan Jordan

Yeah.

question answer the first I and sure in run make investment see to Just you I income question, will business. are clarify in run rates the rate your investments the are first. The investments fixed embedded that

use will our and available not data in nature, we that as how the investments investments. information greater more as how business, make the in technology of and outsized think we liquidity. force, and are sales they greater we customers transparency trading They which things So to well create are

in research to invest us, and for agencies. rating municipal example, where ability differentiate analytics rely major ratings financial provide securities, continue our also that the institutions the We can't on tools to around capabilities really our on

that's So but in our tools like embedded that, run-rate. all

when business the about what just you to ways. our both run income future incremental fixed not clarification in rate. it's are more see asked you fourth-first you answer or quarter question, to So referring can broadly? The activity, I M&A

Jennifer Demba

Broadly. company. Across the

Bryan Jordan

existing in would say we future. don't to Capital do we don't Bank by a into I the go primary look XXXX anything, and threshold. objective. But M&A law, $XX by law, President. on house and like is billion current gets the are deal focused to what under that approved landscape actually likely and know We we I the Yeah. the phrase, integrating is think can Senate we whether with our Bill in enacted have and still the given signed and

thinking we use is is we the be and opportunities to term, Capital really next impact short mix it. on not about integrating that good, tool to are attractive if that. and/or of that think some and done can funding a tool So now, grow us thinking of are allow right think business, Long a only Bank We But we demographics disciplined M&A business. improve consider to our be fashion. the to term on not will focused the our are in use, there it. may but that beyond the Certainly, that has the business about what markets

Jennifer Demba

that markets particular any would over the more to term? enticing be you there long Are

Bryan Jordan

a franchise expanded -- us Mid-Atlantic marketplace attractive be And us. that. to has and to very Capital given continues toehold the Bank taken Well, our

think there, we we those the South better Capital Florida Florida had So we given M&A, do if much a fill our of the banking, And funding funding and markets, in a if South that balance to Bank attractive about don't the are think self-fund. has always specialized deposit in, aspects because generate market, that, and at us that assets, opportunity small the would of big to potentially, we Florida and as feel have about do about demographics simply anything, very-very the be you look we have of while lot And attractive. sheet, mix South learn businesses we as presence still about in attractive. but

And and we what a back of that what could so, unfolds opportunity funding opportunities will are in geographically attractive an again, type as and centric to that But be. may right opportunity. as the see focused landscape be an it point; is you have the integration, well. tend we institution doesn't fill the larger anything the might with to in, legislative XXXX think beyond we on And and now, from perspective, as is, that

Operator

Michael The from comes next Raymond with question Rose James.

Michael Rose

my taking questions. for thanks Hey,

how was scheduled Just versus accelerated? that this the on quarter, of much a clarification accretion that $XX.X million,

Bryan Jordan

Michael. so or scheduled, million $XX maybe was

Michael Rose

where you both and Can guys you expect a next didn't at of Texas helpful. us then, in loan and the quarters of talk growth impact and in in expectations with give Florida. least And the for about, states, stand then this hear that's in or terms Thanks. the portfolios of years? or those sense what maybe Okay, for the thing quarter, one outlook, I couple

Susan Springfield

We out divided real a quarter-over-quarter are our commercial have and major for growth great among the market, there of job done many relationships, energy. that of X% pretty a growth team great Texas has in businesses three cases. bank. had in Texas We seeing relationships estate great That the full evenly in we C&I, actually bringing

Texas continue we to be in future optimistic about the that market. growth So

there time, relates as do industries are about still as good believe opportunities As we Bryan up to us that are different on the get speed over to But it we there. loans the Florida, be said, market. Florida to we will South for learning grow

C&I side. Bank on some bankers, have Florida very and good commercial the We estate in side the the strong market, South both Capital real

be very pleased the will are continue So attract. with that relationships we they to able to

Michael Rose

any are those growth? in balances states Bank and of the impacted with the contributing hurricanes, efforts, what by Florida particularly Thanks. each to South guys recovery and both for were sense you are Capital loan in a have then see states, those so starting you Do to

Susan Springfield

Yeah.

rebuilding very to actually Texas, mentioned, reinvestment more in some evenly to was of As million relates an sort to impact view there I damage. we $XXX little Texas South in divided -- direct more it customer We among Florida, damage as some about and of as it's probably that the opportunity, related opportunities will be and terms, related Florida. obviously, overall There those Texas and in frankly pretty the as had hurricane, three. had

opportunities very as to few us there impacted. well. some customers had directly had But for there grow Florida -- South be will

Michael Rose

accretion. Okay. for back just That's more helpful. And BJ, to maybe, just one the

that or to there said to said outset, about quarter, -- I flows, you total the good be still Capital or number million. that with realize think, expectation number that in cash Bank the will the at expected higher? is you use, recast number Is from a the that was $XX an accretion the you that last

BJ Losch

I don't remember number. saying that

in in we quarter ways. we saw we bit try I accretion I -- did a think But and we expected, several full years, than of comes when than next did the etcetera. you what we recast year you know, kind think to give in said little XXXX, different guesstimate this that, more for we a over see of might

just of question it when terms in so, And accretion, a it's in. it's the finite, of somewhat comes aggregate

higher all So at this we visibility we a probably thought of the ago. and point in that it's best coming little XXXX, what than XX have days would say, so, have in bit again, to

that We and the still come might again, be case. down next several will years. quarters that expect that, quarter-to-quarter-to-quarter it the over But

Michael Rose

my taking questions. for Thanks Great.

BJ Losch

Sure.

Operator

Inc. Stephens with Stafford Tyler from is question next The

Tyler Stafford

morning guys. good Hey,

Bryan Jordan

Good morning.

Tyler Stafford

bank? more the loan growth; at the growth clarification question is for on that digit one mid-single Just loan so the the year, regional comment

Bryan Jordan

Yes.

Tyler Stafford

Okay.

since the regional be of expect at growth that Is low right to about digit and high segment warehouse, bank? mortgage way bank warehouse you then included within the So the regional it. to growth think would the mid-single there, is digit the that expectations that double the digit in single

Bryan Jordan

Yes.

Tyler Stafford

Okay. And at $XXX then you to run-off have, portfolio? the consolidated $XXX of million non-strategic call million the from it

Bryan Jordan

-- not may It

BJ Losch

lower. little a Probably

Bryan Jordan

Yeah.

Tyler Stafford

bit than lower A little that?

Bryan Jordan

that. has to smaller $X billion, It it's probably so just down than Yeah. gotten over

Tyler Stafford

Okay.

XX down was million, quarter, to it $XXX that's was like the think this how getting I that, I that so that. annualize you was

Bryan Jordan

Yes.

Tyler Stafford

All Okay. right.

loan on right. be then a that. think year-over-year. than can All you quarter, the for And it $XXX lower this -- help about me balances held $XXX would sale then the bit it up and million on to There little So those? were, million call how

a quarter-over-quarter drove to actual going from $XXX seasonality bit. up, that? kind the balance it the the that margin I think we call kind core helped And basis because those of that for and that, do up million, or were Just about perspective that forward, of think how yields points a of what's XXX on expectation that what quite

BJ Losch

to and a held little to those sale, related and it bit will relates government loans Tyler, really specifically we the Coastal are to as for more loans, so, guaranteed acquisition FTN Yeah hold. that

fluctuate continue that's what at we of the would year-over-year, course, to types look it So of be if of those expect levels. types to is, at increase those levels you and but

Tyler Stafford

on hold you said should yields But the that?

BJ Losch

loans The with government move yes. around move and and rates. relatively guaranteed Well to lockstep on in yields are going do rising yields rates

if rates yields where should they better. they So those should yeah, a and little bit to are, be continue perform rise,

Tyler Stafford

items a then the quarter, negative of it. the just this kind positive expense before were side And expenses, Obviously, cost Okay. there for either expense on one good this time any savings. the and run or the Got rate is on CBS base?

BJ Losch

Yes.

expenses would a there that, so expense, other or acquisition item, would be is building gain material. and rate, nature, that in notable as we had. we anything more from then in million related $XX it But an of be that a the not that a than out sale broke we office the that's wasn't time So run -- actually, on had one

Operator

The next question Vandervliet from UBS. comes with Brock

Brock Vandervliet

through was given just this something as a the special have I or Investor really Thanks for integrating you you of you if forum, more the -- if and questions on that, earnings this come of of power potentially thought things, this all Day an and having acquisition with us to wondering, engage like vortex to integration? detailed taking sense earnings my give backside investors question. about on power

Bryan Jordan

an think are thought our hard. we That's about one the balance we Hey saves, and I month got of our suggestion, at you understand one integration charges. to up of fourth by Brock, take right, that. But and this you hadn't when merger a Bank and interesting quarter, that, When a calculate, income have ramping statement, it looking is a is we [indiscernible] average full sheet had numbers quarter, in and you Bryan. got month we as the you and Capital that's are to then are vortex, a will is then thing difficult cost today,

sense. might that make some think I

something year, I that's hard that we back to So we will think integration, -- think ought to get the get through we the about. the half of as real

Brock Vandervliet

Yeah.

be great. that'd think I

now. I think right the themselves, tell are, numbers it's you given not where you often especially story, and just how the

great. Thank you. So

Bryan Jordan

in on so. down the sit addition point, interesting the is for our You're focus there it's welcome. day to going and To integration, an and and to awful a in your us or an tell it's think the just way story I for numbers, not lot business,

Brock Vandervliet

Great.

Operator

comes Christopher from FIG question Marinac The Partners. with next

Christopher Marinac

a the on that core bank a or regional had kind the of margins accretion yields So yield could into we question holding kind accretion at regional similar Brian, we core companies? quick. same backdoor a the follow-up reflect and of BJ does real I Thanks. at see bank?

Bryan Jordan

Yes.

Christopher Marinac

Okay.

change So link of about core Will regional the loan mid that kind does be that fair sort think in to yield the of be it? a teens? on basis quarter bank, way the of

BJ Losch

can you, look it But and I'd with at like, go Aarti. Chris. have if with back you to follow-up we

Christopher Marinac

just systems side. give and more you just on that to great. for be Not completed, that would products, have conversion that investments That or integration of you side, separate making the this do you capabilities digital the digital do a does on banking follow-up, problem. And top is will the a be with year? then, has on the When additional

Bryan Jordan

really Hey is First it's system. change Bryan. today. well a the migrating really the extent digital side, Essentially, management won't consumer Chris, to interest on on the this side, our migrating -- Tennessee the treasure to core It in and total, it's on capabilities particularly large

digital over about if we are we on they put but several that So happen we that be diminished make way back there change here, the burner, be our of Investor required enhanced, going my you on be required or enhance in about in at the Brock's that's the our in the investments that we an have you integration. be on There will Day, the will technology make capabilities really that can amount integration that an the that won't to things in the along, our there, And to amount response platforms. been touch will investments business, we is, save is and look side, to over as think fair on in how think particularly important will do so always focus enhancement question platform. won't of And we follow technology is a topic, change that capabilities.

part transparency, enhance be five-XX will customers, etcetera at executing we for the minimum. think, continuously next our the that I business, transactions, a years, so we of both around for will And a capabilities, digital continuous think, our and

Operator

Bryan turn question-and-answer closing conference remarks. to concludes Jordan like I session. would for any back This the our over to

Bryan Jordan

we with Debbie. us this any appreciate you, Please a you great being any We all out support. Thank reach us, and to interest Thank your you of morning, questions. hope for and have if have I Aarti, your your you and time or weekend. appreciate

Operator

conference presentation. you now for today's Thank attending has concluded. The

may You disconnect. now

First Horizon (FHN) 13 Apr 182018 Q1 Earnings call transcript