First Horizon's 1Q Profit Rises on Expense Cuts

First Horizon National (FHN) in Memphis, Tenn., boosted profits by cutting costs in the first quarter.

The $25 billion-asset company said Friday that it made a quarterly profit of $41 million, a 34% increase compared with the first quarter of 2012. Earnings per share of 17 cents met Bloomberg analysts' expectations.

First Horizon's revenues fell 15%, to $317.8 million, but a 25% decline in expenses helped push earnings up.

Noninterest expenses were $240.5 million, $81 million lower than in the first quarter of 2012. Its personnel costs fell 21%, to $139 million, as it completed an employee buyout on March 31 and froze its pension plan on Dec. 31.

First Horizon recorded no costs for mortgage putbacks, after recording $49.3 million in the first quarter of 2012.

Noninterest income fell 23%, to $156.4 million, as mortgage-banking income fell 60%, to $9.4 million, and revenue from capital markets fell 26%, to $79.2 million.

Net interest income fell 6%, to $161.4 million, as net interest margin contracted by 17 basis points, to 2.95%. Total earning assets fell 1%, to $22 billion.

Provisions for loan losses rose 88%, to $15 million, while net chargeoffs fell 42%, to $26.7 million.

"We're focusing on areas of our business where we can create value for the long term - winning new business, developing our people, smartly reducing expenses, investing in technology, streamlining the way we get things done," said Bryan Jordan, First Horizon chairman and chief executive, in the news release. "The strength of our regional banking business, First Tennessee, and our capital markets business, FTN Financial, is apparent as we've refocused where we know how to compete and create real value for our customers."