First Horizon National, just after the closure of its merger with Iberiabank in Lafayette, Louisiana, said Friday that it plans to cut spending more than expected due to the uncertainty imposed by the pandemic.

Memphis-based Tenn., Also continues to increase its loan loss reserve and tempers loan growth expectations for the remainder of this year and into 2021.

“We’re probably still in the early days of how this all plays out,” CFO BJ Losch said in an interview after the release of third-quarter results for the company with $ 83 billion in assets. dollars. “We think it’s best to be careful with reservations now, even though we are feeling better and better with each passing month.”

First Horizon’s total allowance for loan losses was $ 227 million for the quarter, well above its $ 67 million in net write-offs.

“We are focused on the merger and integration that we have ahead of us” for much of 2021, said Bryan Jordan, CEO of First Horizon. “This is the most important, and then we will determine what follows. “

While mortgage lending and some specialty lines of business such as equipment finance show strong demand, lending opportunities overall are modest, Losch said.

“The demand for traditional loans across consumer and business portfolios is quite low at this point,” he said. “So we have pockets of opportunity that can offset some declines,” but “we don’t have very high expectations for loan growth by 2021. It’s not because we don’t want to research new opportunities. … But that’s just the nature of the environment right now.

Ultra-low interest rates that reduce loan yields and hamper net interest margins add to the need to cut spending, he said. First Horizon’s net interest margin of 2.84% was down from 3.21% a year earlier.

First Horizon said it had already withdrawn $ 15 million from the combined company’s non-interest expense base in preparation for the $ 170 million cost reduction target by 2022. It is reducing overhead costs , branches, operations and IT services.

Amid the pandemic, First Horizon plans to cut costs beyond those targeted by the merger, Losch said. The company didn’t specify a dollar amount – expect more details in early 2021 – but Losch said First Horizon will try to capitalize on the shift to digital banking, and away from branches, as the pandemic does. accelerated. He said the company plans to consolidate more branches and office space to cut costs in 2021 and beyond.

During a call with analysts, CEO Bryan Jordan was asked if First Horizon was considering more merger or acquisition opportunities, given the economic disruption.

“It’s not really in our frame of reference today,” Jordan said. “We focus on the merger and the integration that we have ahead of us ”for much of 2021.“ This is the most important, and then we will determine what lies ahead after that. “

First Horizon reported third-quarter profit of $ 523 million, or 95 cents per share. This was up from $ 110 million, or 35 cents, a year earlier, although year-over-year results were skewed by the Iberia merger and the purchase of 30 branches. from Truist Financial this year. Excluding the impact of these transactions, earnings per share growth remained stable.

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