Legal costs and a tax credit impairment during the fourth quarter at First Horizon National in Memphis, Tenn., offset loan growth and a rise in fee income.

Net income at the $26.2 billion-asset holding company for First Tennessee Bank was little changed, at $47 million, from a year earlier. Earnings per share was also little changed at 20 cents, a penny lower than the estimate of analysts polled by Bloomberg. Total revenue rose 7% to $298.9 million.

Noninterest expense rose 18% to $243.7 million. The efficiency ratio worsened by 754 basis points to 81.94%. The expense incresae included $14.2 million in pretax loss accruals related to legal matters and a $2.8 million impairment of a tax credit investment.

Employee salaries also contributed to higher expenses. Compensation costs rose 15% to $136 million, in part because in October First Horizon acquired the $430 million-asset TrustAtlantic Financial in Raleigh, N.C., to expand its retail footprint in North Carolina.

Net interest income after the provision for loan losses rose 8% to $165.7 million. The provision fell 83% to $1 million. The net interest margin compressed by 4 basis points to 2.82%.

Total loans increased 9% to $17.7 billion. Business loans, the largest category at First Horizon, rose 13% to $9.7 billion. Residential mortgages fell 6% to $4.8 billion.

Fee income rose 11% to $132.2 million. Revenue from FTN Financial, First Horizon's fixed-income division, rose 27% to $61.7 million.

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