Acquisitions would seem to be a logical course of action for regional banks struggling to expand revenues and streamline operations in a low interest rate environment, but some bank chief executives are more open to the idea than others.

First Horizon National's Bryan Jordan and SunTrust Banks' Bill Rogers expressed vastly different views on the wisdom of dealmaking in earnings calls with analysts Friday.

Jordan said that with rates unlikely to budge anytime soon, acquisitions have to be on the table if banks are serious about creating value for investors. Rogers, though, seemed almost hostile to the idea when Deutsche Bank analyst Matt O'Connor suggested that now might be a good time for Atlanta-based SunTrust — which hasn't bought a bank since 2008 — to pull the trigger on a deal.

As Rogers sees it, acquisitions — particularly out-of-market ones — would be a distraction to its chief aim of deepening relationships and strengthening its presence in existing markets.

"We want to make sure we don't do anything geographically that dilutes the opportunities within," Rogers said.

There is little disputing that revenue growth has been a challenge for both banks and likely will be as long as interest rates stay near zero. For the quarter that ended Sept. 30, SunTrust's revenues increased just 1.3% from the same period last year, to $2.1 billion, while First Horizon's fell 9% year over year, to $288.9 million.

Overall, SunTrust's net income fell 7.8% in the third quarter from a year earlier, to $519 million.

Rogers' strategy for improving the revenue picture is to invest in technology, loan officers and other assets that will improve its service and efficiency, while keeping a tight lid on expenses.

Rogers had previously set a goal for SunTrust to improve its efficiency ratio below 63% by the end of 2015, with the ultimate goal for the ratio to fall under 60%. SunTrust dipped below 63% early, hitting 61.44% by Sept. 30.

Overall, Sandler O'Neill analyst Stephen Scouten wrote in a Friday research note that he expects future improvements in SunTrust's efficiency ratio are more likely to be derived from cost cuts, rather than revenue gains.

Still, Chief Financial Officer Aleem Gillani, said that the $187 billion-asset company is more than willing to spend money to make money. For example, he said the bank could hire staff to seize sales opportunities or increase its tech spending without necessarily hurting its efficiency ratio.

"If we do get revenue growth in the next year or two, I wouldn't be surprised to see expenses move up," Gillani said. "We are not adverse to growing expenses as long as it helps revenue at a better pace."

The $25.4 billion-asset First Horizon says it needs to explore a wide range of options in order to improve its performance — from expense cuts to booking more fixed-rate loans to mergers and acquisitions.

"We look at the rate environment as continuing to be challenging and…structurally lower for an extended period of time, which means that we and others will have to continue to look at how we do business," Jordan, the company's CEO, said in a conference call Friday.

The Memphis parent of First Tennessee Bank and FTN Financial Group reported a 46% increase in its third-quarter profit, to $67.2 million, but its net interest margin fell 12 basis points from a year earlier, to 2.85%, and its efficiency ratio, while improving, remains elevated at 70.53%.

On the expense side, Jordan said he expects the company to reduce its branch footprint as traffic continues to decline. He also said the bank could improve its net interest margin by adding more fixed-rate loans to its highly asset-sensitive balance sheet.

But perhaps the best way for First Horizon to meaningfully increase revenues and profits is to bulk up through acquisitions. Earlier this month, First Horizon completed a deal for the $430 million-asset TrustAtlantic Bank in Raleigh, N.C., and Jordan said Friday that it might "make sense" for the bank to consider more deals.

"Greater assets on your existing cost base … is the way to improve returns and drive profitability," Jordan said. The strain on revenues brought on by low rates, combined with the technology investment many banks will need to make to stay competitive, is creating "an environment where there are greater opportunities for M&A," Jordan said.

Christopher Marinac, managing principal and head of research at FIG Partners in Atlanta, said he believes that "acquisitions are in First Horizon's future."

The increasingly bleak revenue picture, he added, is forcing more and more banks to consider teaming up with other institutions. Several deals have been announced in recent days and Marinac said he expects activity to pick up over the next several quarters.

Still, with regulators taking longer to approve deals these days — First Horizon waited 10 months until it won approval to buy TrustAtlantic — Marinac said buyers need to choose carefully.

"It's like deer hunting," he said. "You have limited time and limited ammo, so you want to hit your target."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.