Financial stock under pressure: First Horizon National Corp (NYSE: FHN)

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First Horizon National Corp (NYSE: FHN) stock lost over 1.1% on April 13th, 2018 (As of 3:05 PM GMT-4; Source: Google finance) as their loans and mortgage companies had a seasonal decline, even though the year-over-year growth in that business was 19%. The Competition continues to be high.

On the other hand, to offset this pressure, the group is focusing on cost savings and on track to achieve their higher cost save target of $85 million, and forecasts about half of that amount to be realized in 2018, with the full benefit in the run rate by first quarter of 2019. Only four months after since consummating the deal at the end of November, they have roughly $5 million of annualized revenue synergies closed or in process so far, as compared to their target of $25 million to $30 million over the next few years.

Net interest income as well as the net interest margin rose boosted by the impact of a full quarter of Capital Bank. Loans and loan accretion, as well as the rise in short term rates. During the first quarter of 2018, the group reported a NIM of 343 basis points, which is a rise of 16 basis points against 4Q 2017. They witnessed a combined 6 basis point rise from the impact of a full quarter of the Capital Bank balance sheet, as well as the rate hike, and accretion further enhanced the NIM by 16 basis points.

From the first rate hike of this cycle during the third quarter of 2015, their overall deposit beta was 27% and excluding our market index deposits, beta on consumer and commercial relationships deposit is 15%. But the group sees reaching an inflection point in the cycle and deposit competition to rise. However, they maintained a solid credit quality. Net charge-offs were at just $1 million in the quarter, with an overall [indiscernible] credit of $1 million in the quarter. The allowance to loan ratio was at 69 basis points, which was roughly flat to the fourth quarter. The group’s Capital Bank portfolio is performing as expected, and in the near term, they see the credit environment to remain benign.

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