First Horizon National Corp. in Memphis, Tenn., posted strong revenue gains in the fourth quarter as it completed its acquisition of Capital Bank Financial in Charlotte, N.C., but one-time charges related to the passage of the Tax Cuts and Jobs Act dragged down profits.

The $41 billion-asset company said Friday that it lost nearly $53 million in the quarter as a one-time writedown on its deferred tax asset increased its overall provision for income taxes to $74 million. Its provision for income taxes in the fourth quarter of 2016 was $24 million.

D. Bryan Jordan, chairman, president and CEO of First Horizon National Corp.
Chairman and CEO Bryan Jordan said that 2017 was a “transformative” year for First Horizon, the parent of First Tennessee Bank.

Expenses, meanwhile, increased 46% year over year to $346.7 million after the company paid out one-time bonuses of $1,000 to thousands of employees who are not part of the company’s bonus program. First Horizon is one of many banks using the savings from the recent tax cuts to reward employees.

The acquisition of the $10.1 billion-asset Capital Bank, which had roughly 190 branches and 1,600 employees, also contributed to the sharp increase in expenses.

Leaving aside the one-time expenses, First Horizon made significant strides in the quarter. Revenue climbed 17% year over year to $375 million due largely to loans it acquired in the Capital deal and growth in its own specialty lending portfolio. Total loans increased 41% from the same period a year earlier to $27.7 million, contributing to 24% jump in net interest income and a 27-basis-point jump in its net interest margin, to 3.27%.

In a news release, Chairman and CEO Bryan Jordan said 2017 was a “transformative” year for First Horizon, the parent of First Tennessee Bank.

“We closed our merger with Capital Bank, the largest in our company’s history, significantly expanding our balance sheet, customers, markets and opportunities, all as we identified greater cost savings and revenue opportunities than originally announced,” he said. “We begin 2018 with momentum and confidence in our abilities to create value for our communities, customers and shareholders.”

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Alan Kline

Alan Kline

Alan Kline is a senior editor at American Banker overseeing its consumer finance and national/regional banking coverage. He also helps direct coverage of the annual Most Powerful Women in Banking rankings.