Banking

First Horizon starting to book revenue from Iberiabank merger

First Horizon in Memphis, Tenn., is reaping more benefits from its merger with Iberiabank in Lafayette, La.

Executives said during a Wednesday earnings call that the $88 billion-asset company has been able to generate about $10 million in annual revenue after securing $400 million of commercial loan commitments. Many of those relationships are tied to asset-backed lending and equipment finance products that Iberiabank offered.

First Horizon, like most acquirers, did not include revenue opportunities in its metrics for the $3.9 billion merger, which closed in July.

“The bankers are doing a great thing,” Susan Springfield, First Horizon’s chief credit officer, said during the call. “They are so excited to have additional things they can talk to clients about and not have those go to another institution. I feel very, very confident that we’ll continue to see that build as the economy continues to open.”

Increased revenue is “one of the more underappreciated opportunities” of the Iberiabank merger, says Bryan Jordan, First Horizon’s president and CEO.

The revenue lift comes on the heels of First Horizon’s announcement earlier this year that it plans to wring out $200 million of annual expenses — nearly 20% more than originally projected — by closing more branches and consolidating more office space.

The company said on Wednesday that it remains on track to trim $115 million of those expenses by the end of this year. It generated $19 million in merger-related savings during the first quarter — $76 million on an annualized basis — with an expectation of picking up more revenue across its markets and product lines.

A chance to add revenue is “one of the more underappreciated opportunities” of the merger, Bryan Jordan, First Horizon’s president and CEO, said on the call.

While the company is offering Iberiabank’s specialty finance products to its customers, it also plans to market more of its own private banking and wealth management to the clients it recently added from the deal. Jordan said he thinks the merger can generate more than the $30 million in annual revenue First Horizon gained from its 2017 purchase of Capital Bank Financial.

The revenue boost will help First Horizon to grow “at or above what you see in peers,” Jordan said, adding that the company is benefiting from its dealings in high-growth markets such as Atlanta, Houston and Dallas.

“If you look at those markets, in many cases we have a very focused, and in some ways, smaller presence” than other banks, Jordan said. “But we see a tremendous opportunity to take that focus and expand that presence. … I think we’re going to be in a position that we will clearly grow better than average.”

First Horizon’s first-quarter earnings fell by 4% from a quarter earlier to $225 million. The quarter included $70 million of merger-related expenses, or nearly double what the company incurred in the fourth quarter.

First Horizon decision to release $53 million of loan-loss reserves reflected an improved economic outlook and a decline in outstanding loans. Average loans fell by 3% after consumer loans decreased.

The company, for now, is focused more on integrate Iberiabank than pursuing another acquisition.

“As we come out of the integration in the fall, [we will] really start to build momentum and capitalize on these growth markets that we see out there,” Jordan said. “Our priorities haven’t changed. It really is trying to capitalize and deliver the [acquisition’s] benefits.”


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