First Horizon (FHN) 17 Oct 192019 Q3 Earnings call transcript

Good morning, and welcome to the First Horizon National Corp Third Quarter 2019 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Aarti Bowman of Investor Relations. Please go ahead.

Eiley. you, Thank the we'll that the financial and www.firsthorizon.com. supplement Relations Please in earnings this presentation at website use of on call slide section note our release, are Investor posted

will this from and outlined quarterly recent differ information in mention In earnings forward-looking we forward-looking non-GAAP and results the of information. number a annual materials reports. and for our may Actual reasons most call, our

today is Our them. and as reflect forward-looking views we update earnings information our obligated this call our the The not in to and non-GAAP in is materials. those slide identified in for are such to and reconciled statements materials information GAAP presentation

speakers CFO, our Also, is this authorized the include please BJ Bryan only morning's of our and Jordan; Losch. that note CEO, webcast our on website record This this call.

Officer, and Bryan it Additionally, Springfield, our BJ over now Chief to I'll for Credit available will turn be with Bryan Susan questions.

morning, pleased expenses. sheet joining efficiency Good good for balance remained everyone. trends, you third Aarti. results. showed financial with disciplined our you, strong and with Thank We Thank I'm improved call. our quarter

The returns third XX% challenging helped in lower that quarter rate business was interest even revenue Fixed rates environment. income a greater from us produce last counter market volatility. mix up cyclical helps demonstrated year, and good by our

revenue to quarter nearly increased daily Average $X third million the XXXX. in

by with to loans up helped year-over-year. rates, was lower mortgage also business Our warehouse mortgage companies XX%

momentum XX% in loans markets, position, key profitably Tennessee. businesses we're our quarter, the year. our delivering average strategic that markets strengthening Day Our year-over-year. with balance up saw on new good third the in growing We're while outlined showed dominant sheet we priorities last across results In Investor our our specialty at

showed customer on efficiency deposits growth we our improving growing an the mix, revenue basis. the our costs, an our I'm funding. also improved growth ratio We're in particularly resulting third controlled in key pleased quarter, with solid In and to replace markets. deposit customer wholesale adjusted funding

saves for cost are reinvest enabling into better with to customers. technology the our us company, and Our better products

The Southeast economy Overall, has and customers financial somewhat, growth reasonably current the about our prospects. but economically. good are good, position, across in the operating positive our and slowed they environment markets remain remain

XX investments markets Over past on cost increasingly and the same we offer, effective Bank and provide products completing convenient the to on been XX businesses. executed opportunities the to months, growing integration us position at since that the an implementing merger, to better of our attractive are the time, way. and in focused We've making plans we've services Capital

have now improvement position power Our the back to some us through solid the long actions enabled deliver in turn term. the BJ? comments. closing and for I'll BJ to I'll to for go over earnings this quarter, then call our be us year

Bryan. Thanks, X and priorities We out quarter 'XX, newer $X.XX I'll Good results, on Investor our a adjusted entered markets our our financial growth execution everybody. strong at earnings had which merger. from with Slide start basis demonstrate our good continued Day key notable laid another Capital on November morning, XQ Bank and last momentum reported our in with $X.XX items. for very we on

of banking with our was very linked loans just driven X% in strong loan quarter. revenue performance in the $X XXXX average specialty growth overall both in We markets fee our quarter businesses, and in up revenues strong We businesses. its by income fixed saw quarter. daily X% saw continued growth strong our both income particular, up and under linked million broad-based FTN,

delivered South deposit our enabled both to with a We customer deposit These the key Strong and modest helped growth, interest resulting positive for control and interest Florida in in fixed with good focus, quarter this decline as to business strong reinvestment strong X and a rate and deposit points higher paid key revenue accretion, basis good saw discipline grow in on million mitigate core income pricing by we pricing discipline, continued such compensation, us macro And allowed Expense customer healthy the flows $X Carolinas. coupled loan lower another base. quarter-over-quarter. supporting income the offsetting well in efficiencies as customer deposits in mix growth growth deposit markets, expenses, the core and variable with our continued rate Tennessee, business. a quarter. growth as strength shift net the remains only in pressures, Middle lower

related employment with the legal to out items legal along some much we matters asset quarter. that Other were impacts the fixed notable on up efficiency than and of would impairments. which primarily expenses agreement charges, rebranding, in October, actions, restructuring in and expect for due related expenses to notable the legacy matters, primary drivers efficiency items of fourth roll late out we'll we've acquisition-related right lower some were listed X% bottom resolutions Total to our The slide.

Turning to growth Slide loan X. on

and You are growth And most profitable ones on at has the sheet much the very can key materially year, and that Day at the we November. X% than focused specialty higher that growing. growth Investor businesses momentum. XX% we that have been balance X% after discussed year-over-year, see in seen we segments loan Bank Total to last systems the last markets the mid conversion are improved Capital growth sales

the loan Slide X. in more on at detail Looking growth

specialty that on have and up strategic XX% clearly Linked growing paid those see quarter were areas XX% can year-over-year. off. our focus loans grew You

since increase And while the third XX% linked quarter business As help expected, of to offers and countercyclical in companies purchase drive strong volume. as remained the mortgage loans lower refinancings were earlier, market growth delivered Bryan strong rates benefits the higher more year-over-year well. quarter, very mentioned of XX%. with increases

mix volume volume, purchase XX%, refi XX%, In the with refi outpaced respectively. fact, purchase at

flexibility knowledge our and expert to continue buy share balance through maintain competitive ability and We to to market grow sheet pricing provide -- customers. capacity, our

loan loans grow in left well. you slide, only see growth the the linked As aggregate, did Specialty mortgage area grew companies businesses specialty in businesses of companies, lines bottom all mortgage loans quarter in other excluding can quarter not South delivered but a to linked quarter of Texas, this as markets and linked Middle and year-over-year, and X% solid Carolinas just our key as growth also Florida, under increase year-over-year. was X% X% the X% Tennessee, with to well, up

Shifting to X. deposits on Slide

on key growth You can growing deposits, specialty emphasis deposit areas. markets continued see our in resulted solid across customer and

in the of look very we've at growth across Tennessee. bottom areas: growth in healthy growth seen X% you markets; and XX% year-over-year If the all a XX% in deposit excellent key year-over-year businesses; specialty deposit slide,

manage Florida deposits XX% growth. in markets, dedicated off due our double quarter which Mid-Atlantic focus with also Tennessee our X% on linked digits, Carolinas, growing decline were and consistent deposit to in mix building on primary this our points South is In primarily continuing shift paying relationships X customer By growing consumer basis deposit focus to particular, appropriately, a up and across deposit another we bases. commercial down Noninterest-bearing were saw rates another quarter. market key our X%. the our cost, Middle our the in and

and margin, the at NIM balance Turning XX. manage we and NII to rate proactively to environments. the both optimize drivers sheet NII to in various Look continue Slide

largely costs. was interest impact as large lower NIM due our in decline The core decreases to NII were to as loan accretion can step-down as due LIBOR and well commercial strong up rates. of overall growth in income net well you a see, deposit As as the

support offsets expected affecting While mix countercyclical overall the our our like is lower NIM, not rate the helps business is our unique across providing the and do in others that environment NII industry the that earnings. industry, possess, others

interest benefit specifically mortgage benefits derivatives fixed Within strong from volumes lower income rates, line, companies our net income the rate loans and that our higher income we to through from businesses fee our businesses and saw business performance. falling

for key sentiment Slide see to about decline up as interest customers average the of fixed swaps, execute business. well, year-over-year. revenues lower towards the product higher the continued some another We to of and with favorably Other income. in continuing market all million quarter, daily resulting quarter Moving revenue $X rates day, drivers derivatives in our again, in The and quarter. increased impacted XX% activity fees from rates, up in volatility XX% rate quarter Linked XX. last a great

revenue in few years last pleased the in conditions. that the from work continue of FTN Kisber our margins business on drivers at team the the hard fixed improved in we're his And and incremental expect growth over to strength have with the earnings addition, done prior have Mike Based market costs we key very levels. profit on to its current income, reduce fixed in revenues

expenses on to Slide XX. Turning

a the full investment We've core efficiency actions is to cost this optimizing strategic cost. expense our to We've demonstrated of improving benefiting our year base expense You to year-to-date. areas management out they merger all unnecessary disciplined capturing XXXX, services year on about our taken our incremental meaningfully rethinking enable the see in of that and million And customers structural achieve approximately based on benefit on off. how across we we've from paying of incremental addition to both reinvestment. basis efficiencies, spend improve and reduced saves in across $XX million rightsizing with additional focus deliver by of take $XX our want processes franchise cost what business, to

management. starting achieve technology, have X% this of gross million With growth will of base, such avoidance the well meaningful areas while needed such about our and as customer invest to Florida, as South and digital banking, a $XX experience as we'll expense treasury in cost amount markets, reduction year, saved we as

uptick lows stability related charge-offs credit remained credits, we're quality in migration, in still Turning commercial due and was to The modest at releases our charge-offs provision nonstrategic and overall quarter. growth still asset in by net X continued was offset historical the relatively commercial to Regional quality seeing Loan and strong. linked on provision grade slide. credit remaining loss quarter portfolio. reserve linked loan portfolios, stable next net the bank to strong with up

laid To our can Investor Day. November control priorities sum what delivering last up, key we're the we out on and controlling at we

and reinvest in a income smartly, We're such are companies, unique as quality and the is momentum, rate enhance areas. in loans providing the into expected strong earnings balance environment. we Credit stable. company our our to savings mortgage We're countercyclical that have deposit offsets key loan deploying and to capital power. specialty and cost We implementing to fixed sheet declining with businesses, further good growth markets

with outlook up XX. Slide slide the Wrapping on

unchanged. return tangible common see efficiency and year our outlook that the You'll remain on ratio credit for for quality equity

discipline. However, reflect we've increased expense our coupled income, revenues strong outlook the ongoing fee with ROA to on higher

LIBOR. in As the year an our cuts accretive outlook to expectation we've X% capital loan updated to our as our than of NIM CETX the for somewhat in business. X% outlook to year further range year due this exceed industry, likely X% income be we the for put Again, of rate and Fed full in expect as that earlier offset the additional countercyclical well opportunities, previously Due to two to have fixed to and lowered be with to loan in work levels X.X% cuts to our subsequent as offsets the as declines for strong others prior we will in growth have impact rate NIM the able to our is fashion, growth more expected, been organic well the Fed year.

it some can back he make turn Bryan, over I'll that, with and to comments. closing So

fourth momentum We we about of across good. our the continue The of remainder encouraged the the and our economies see and we're very BJ. the the year, you, very feel outlook good going footprint into be in to turn XXXX. by for quarter Thank

well customers improving Our are sheet, balance and our we're optimistic, continue to positioned profitability generally controlling and expenses. growing

colleagues, Eiley all our business the in work hard With Thank you we'll serving of take some for to questions. our and that, quarter, no their customers. building all our

[Operator Instructions].

Our Alexopoulos Morgan. from Steven JP first with question comes

the NIM I'd like start on to guidance.

pressure the look X.XX%, in that cuts BJ, XQ, at implies rate step-down accretion from new the full the for large Or maybe range this So so. there assumption is coming if 'XX, the drop is here year two a coming the at X it fairly sharp point XQ? get margin in we another in or estimate quarter? I basis

Steve, question. good

modestly So from I the third quarter, a quarter, expect you was It'll from quite continue quarter to a can $X the $XX third. down fairly of we second step-down accretion million had million to fourth. large see in about step-down probably this the step-down. down big loan that wouldn't the second about in a big in to come in but

two I think related fourth our now more cuts assumption it's in rate to quarter. current additional for the Fed

one the futures more the year. side, next of another But cuts. over rate then October, Fed and as of this August As conservative cut, all imply of to only moving funds rest year have rate two actually we're not been you the place. know, futures morning, on the until But in assuming this one be

that we in the the And further there on fourth margin so will continue to quarter. be assume would pressure

August. at Okay. see Or And moved in on the bigger volatility That's lower look volumes? traded Is in fixed saw end increase million the rates it back a range, historical sustained the the pick-up then high really to to at I the was $X helpful. business. ADR, If just just nice where this or volumes? market short-term you're seeing overall low income you of

I consistent. would pretty actually say, it was

slightly September to just million, at month July under to was $X around $X million. million, month was right and If the was look month August you think for I above quarter, $X

consistent. was was fairly of thing days above $X above we trading of XX% were trading of about But interesting quarter days that XX% number the above $X it was to And the the that million actually in days see million. -- had so $XXX,XXX.

So what seeing. had we consistent were the quarter of terms volume we in very throughout

these continue for forward, So encouragement at conditions, least in of a can that that gives this current FTN. lot kind us performance market of going

the That's CECL? ongoing about anticipated finally, helpful. And impacts what's think BJ, provision Okay. just from do how day And CECL, one? on you impact

Sure.

yet but can do our amount a have as probably disclosed earnings So work, for we of haven't quarter our CECL. you fourth done that impacts course, We'll significant of imagine. with we announcements,

an the on on assets, impact of portfolios. longer-dated the industry the see consumer the an And more so to portfolios, like less on more impact of much expect we commercial

upcoming quarter. be the the will we're So in that believe, in seeing industry, what I generally, we with line we'll fourth across but disclose

Ebrahim Bank with of have we Next America. Poonawala

I plan. if the around could guess, BJ, you help efficiency clarify

at net how much on. all $XXX the year on through expect in? going of I'm trying million How you restructuring, When capital that any comes next the that baked through that think quarter, -- volatility? we quarter? how has about where the that's So $XX core rebranding, much look million savings you of rate through ex for as just the fourth in of expense of we markets think just into to should third expenses look

Yes.

our the and if -- look across stability gives you a quarter-to-quarter relative XX, it you with growing So fixed kind view that's you Slide at if of look good of of pretty expenses, materially income.

of cost out particularly So during the year. we've the the been half taking organization, first of

Some of year, offset with comp by also, the it mentioned. being variable FTN I as but towards the second half of

not line. So It's we just the are the in dropping all reinvesting to business. bottom

is And part so our year. more latter of of the the reinvestment hitting in

quarter expenses on expect the or seeing. be give in I we're in $X this take, to So fourth based range, million what

will very, business good be of, the which very We expense have in proud reinvesting discipline, but as we we're well.

Understood.

$XX net the numbers. reflected the one savings, or So million these in way of other, are

we right. got sure Just making that Understood.

at year. our the relative run-rate was in has That's It of what beginning come an the number all-in across year. to the

should continue business leverage I was think us tied get the ex when it? like trough into of it think the Or we to about Can operating when the you is XX%. like ADRs there better about a into next ratio about does that about year, a XX%s? fall in you natural just if that, markets, efficiency then the cap you think legal sense guess, give to XX%, And how

Yes, it's a good question.

generating and look a If at to out this we're I few margin comments the a some doing in other Mike the revenue XX% the supportive That and of roughly great last taking out legal revenue. work both now. ago. you on fixed and that have costs incremental margin, business be of on team my of quarter, matters alluded right XX% do weren't take there been used and years a the XX% quarter that Kisber really to last cost that opening has out years couple

And so much now getting we're leverage. more

see efficiency that ratio today. XX% incremental margin overall help the course, So XX% we will, of

So would efficiency as get continue to better. to higher, expect fixed we move the ratio income

the October one mix about I the fourth where cut Like question dynamic given seeing plus helpful. can the what X.XX% rate the going defend the in you of a you is outlook forward, margin December the you rate If That's drops? we terms minus you're deposit Can talk to and it and of rate there despite follow-up assume or be And guidance to additional do implied to about point guess shift? clear, margin for just Or on I can, margin in before need the cuts? stop Steve's margin. quarter. cuts

Yes.

side probably side more I plus margin a minus, minus pricing So we the job are the quarter I'd doing the deposit the good our or X.XX% think for in be discipline. than because the with a plus on little that fourth defending

companies volume, environment. to on mortgage We the are seeing particularly loans in rate good based

and offsets, is a headwind. So we good pretty do have the certainly declining but LIBOR Fed outlook

Deposit doubt, or whether pricing a disciplined around general. pricing more dynamics banks very Fed still but in more traditional are you more and have seen online lot the rates, thoughtful more the cutting a being it's deposit no lot banks and with competitive,

And incrementally be headwind is of that so I -- we of supportive think declining but that's LIBOR margins have to and overall, a with. going deal to the more to helpful

EPS that more income to maybe to more levered line and fee the are others business that than income the but loans to remind net countercyclical our in some have interest net again, everybody offsets fixed in unique that of our like in such margin up margin. some we business mortgage interest going our just Although, income others potentially which can show are supportive our of and derivatives companies, the are business like be

Bryan, this is comment. I'll BJ's Ebrahim, add to

tariffs, of when in on the seems to a it's I the tariffs. of little lower, be there going clearly think has And underlying impact from some is rates talk the expectation rates of and slowed you with disconnect what's and expectation there a And going back rates, awful impact. indicated by I think an the on I driven of lot what's economy. between fundamental And bit. as I about the or think lower step lower is fundamentally, interest

But at lot you We see a BJ cut, a the have they go the activities, Borrowers need to on is the of generally lot fundamentally whether our very based even good. of for speaking, our good. a footprint. rates go an need economic And mixed a cuts. Borrowers said, underlying Consumers they -- markets the are about whole business still dialogue If see built couple whether that fundamentally, a we've don't. at in expectation don't discussion more to good. lower bit Fed, are whole are we a lot momentum of in look confident.

of And so business, like of see our underlying we're balance think while to do some momentum in activity. going negative countercyclical us if a we the we then we everybody a else, rates helps lot Fed think that have a there's of cut And bit impact overcome BJ a that, that. as customer margin, on lending and the said,

a cuts as at rate but see we're optimistic outlook. So look and headwind, about these we them our very still

with question next Our Zerbe from Stanley. comes Morgan Ken

can mean When to growth I obviously, And is mortgage very I guess is loan about XXXX, that XXXX? I I something to strong. loans a sort little clarity. continue was just hoping quarter. you of your Obviously, two get -- questions. is that into mean to loan companies this think awesome

one the it like they're some then continue. of side, implies And you strength of, that a mortgage and of tough just and So guess about the it's pace very I see economic spoke do just that some I continuing, seeing, loans kind borrowers given one seems that sort on what but you to just healthy of other positively to think uncertainty.

what The Ken, then, like, to depend you way lower opportunities originators that looks has steady. and loans dropped start XX-year I to bit, next I'll start pick let refi mortgage of number still think there it of as little Yes. and refi potential to up. company quarters Susan for out subside think the and there the I make activity the volumes the mortgage -- on is can a to going is rates with a couple huge extent

warehouse We building would job trend strong some done business that is an market bit and acknowledge that, share business. in down. think those building at a will readily and point, that cyclical very our fundamentally, has But business, our do very of I balances a a outstanding team a of really

grow a share, So on I existing about we've higher run basis. loans still to I'm balances. think improved I our think we'll optimistic at the broader in opportunity footprint

You commercial region, we estate see -- is our Mid-Atlantic South we there the my sort you growth in a on businesses, one are in real very, good Middle data, Tennessee, very year-over-year what's which There underscores little bit our opportunities was it going specialty point that of Florida, on at had see, is there. Florida good economies, in good point, down in basis. business, if next look still our

not So disciplined we look We thing. credit at balance grow to stretch risk standards. the it's sheet think we We the a sheet. do grow our in undue the very important to balance opportunity credit not take that

So to balance to use discipline at keeping be on very sure we're to structure, in the pricing we're the marketplace in continue credit to keeping going and we're time, and we're that as Susan? but sheet capitalize we look disciplined the we opportunities, to make our strong same good way continue a opportunities going try

mortgage the XX we've two to warehouse mortgage years client For the business, the clients last over warehouse. added account

share has important about for been to able business. we market as being expand that that continue us so think to And growing

great We've rates, also the quarters, expand with too. relationships over doing existing with of to they're couple what opportunities had last

for over. recently Most the calling been the in that bring because to we they hired mortgage on a team other and we've to addition of that, from decided RM were who has managers relationship able have a on we several client warehouse finally entities years, come some and on that call, very added to In relationships. talented actually

continue we that feel like So be to good. will business

about the market well expanded fact feel as rates existing with with do mentioned, new As share that impact good but as clients. I clients we've Bryan

Bryan we and there continue the more to what to to then I with believe add And on pleased opportunities of broadly, see. outside am mortgage that do are I said discipline warehouse, to grow,

We not calls to and very that's they're to on. long business winning they're and and term. compete clients as with with important the leaders, we And continue build balance business sheet think we talk for have monthly credit about choosing I the

Okay. That's very my helpful. second And question. just then

In of cost, what you terms looks could your cut, deposits aggressive much much the deposit rate for sort in was given I'm deposit you rolling industry like have October about visibility terms there be if is on off, about of asking cost currently guidance is terms versus you the I points much how pricing? set that those in is do is X of in this deposit of what think costs variability When costs your it NIM know core more a quarter. how of how what on pricing, less basis are? down assumption that for your about dependent guess fourth deposit quarter, And

Yes.

from very we vintages Ken, good exactly our rate, deposit think, obviously know cetera. promo guarantees are, a visibility rolling I into perspective, we et are So rate off, from base have what's what what costs. are, a what offering We

of quarters now we've step-downs So on seen pricing. deposit two

that done a fourth continue, side to commercial think it continue job, to We've a expect rates. maybe moving rates. job on can similarly would side the to expect to good better if the we've good job -- be and on quarter those in little we very rates down. managing I We seen the deposit consumer disciplined cut I a they

face fashion, very So those to key feel about of deposits good our I deposit particularly in discipline markets. continuing a in grow very, reasonable the in

Evercore. John comes Our next with from question Pancari

the the in So your up. loan as growth well growth for the back more and to looking at other X% loan and appreciate warehouse it's you're X% level holding above know to the how both 'XX. businesses as coming around I question, color I broadly,

be to macro in to is that factoring For mid- seeing? something closer the given mortgage range? the this a warehouses, And low indicators single still it of single that then digits, and the could or later is digit XXXX, we're cycle assume fair some backdrop just

Yes.

talked in with year. management which So like time this we see team of midst we every the to quarter Right year. we continue the in into now, John, the planning, our continuing next and I strength think fourth do about, the Board strategy at we're

good and good. for to year across to so Bryan opportunities expect is visibility specialty where pretty And Susan grow. we plans markets be are, next actually sentiment the into understand And We continue the said pretty like so and We to and we we earlier, key where niche the execution know focus, what businesses. is have which businesses. able are want to

doing for doing, last strength continued have Now can difficult. to what at we the that, loans of I volumes, we we've every quarters. quarters the do is XX% can with with how year-over-year, which of to that the for quite couple can going continue time. think be future we they're rates the refi couple they're next But foreseeable that that toggle seen companies, of to momentum year? for That's some think sustain least acting, some Clearly, mortgage the

growth prospects. very loan our So good we about feel

on we if seeing the to that we're look any are impact any the indication warehouse, topic, Just some CapEx seeing you're some at outside -- -- seeing of you sentiments? that then And the softness ISM pullback, Okay. data, yet? there same and borrower

that tariffs. of we We customers really by had couple impacted a were --

as think talked to we people not so -- sentiment a said to. couple And between earlier, of is obviously, are at clients due still That's Sentiment good, the point. I and their good on Bryan this real this just impact that business. their optimistic sentiments cautiously

in build exuberant and to acquire but opportunities companies, optimistic not think talking -- with bankers don't they're So about I facilities, equipment. necessarily our new invest

clients So there our are to grow. opportunities still for

And -- some or is this what meetings -- Susan does don't that tariffs would add business few way don't up. whether way customer some that's up. come their are very I up come it John, There to impacts said. Bryan. not, come

it sentiment about some affecting people extent are talking is because So to it.

they're costs while be they for at fairly higher balance rates look statements higher competing and or you financial good are borrower continue sheets, they still to said, Susan optimistic. very rate, at If labor as

whole, I'd generally look, and say headwinds, people the without but And affect it's come positive higher up people some labor so not now. particularly and around cost do speaking, on tariffs still pretty right are

Okay. more ask follow-up. just could Great. If I one

on you credit the maybe criticize more the commercial more came know delinquencies, bit give the quarter around and can us us two and just color could a down, credits I drove little those charge-offs? And but a your what color higher little for you that On non-accruals happened broadly? give that then more the front, assets

Sure.

had So credits able drivers of energy they and not really had charge-off, production where raise. complete did And to the things, two they we on equity they -- that were successfully were a was inadequate an not an the two credit. one

So quarter did on a charge that we credit. take this

The accounts hospital, And in-house, receivable had and a that their some surgical may specialty become real out. was were very credit, go to operates do inventory healthcare owns -- and difficult getting also collect medical longer billing the they collection acquisitions. they delayed receivables to know with, the that they in out surgery their issue And were had other a bringing centers. and

charge credit a on took we well. So as that

restaurant with just to two a have tariff general franchise -- of some risk companies issues. relates had some companies lumber couple outlook, a had had downgrades that As related We've again, it we've that reputational issue.

broadly. to all these So not those credits. are specific seeing really I'm of anything

same But balances, were XXXX. at of million point level quarter they $XX relates they're about to criticized at at were this they up fourth that the it As quarter-over-quarter.

were able specifically from did mortgage as going to you quarter. held-for-sale. last not we to the warehouse time be that come that related then So loans We know identified to it's into really there's time. That lumpiness some successfully down. actually move was clients nonperforming And to elevated,

last mortgage We charge $X reversal of also on and recovery that about quarter this took quarter, client this charged-off warehouse client, we look so that on a $X.X million, to million good warehouse mortgage feel we that. quarter

expecting actually also in delinquencies. -- of and week. stable million think I you book has -- lastly, million were saw for then to really you expecting C&I, probably roughly with been payoff a already million across the of the $X elevation exception this that $X resolved, and quarter. And they're in $XX mentioned come Delinquencies we're little

driver $X of So delinquencies was those that C&I. in the really million elevation in the the just --

where overall, about as feel our quality. good it very relates to So I asset are we

Brady from with comes KBW. question next Our Gailey

great another quarter in So warehouse. the mortgage

X.X% mortgage it I of was was warehouse, I wondering, the around quarter. last yield So think the

in the was warehouse in if was large any quarter-over-quarter? I With wondering change yield volumes, there pickup that mortgage

Yes.

So it is LIBOR. on based one month

with one down. came yields coming LIBOR the down, So month

gained -- clients capacity the were gotten more as X.XX% tell quarter. -- last saw is the those pricing as serve that X.XX% we've some actually a of would across quarter. you more is this bit to So the volume versus What particularly some very the and I in we've market roughly towards are We were the we well, power now end industry interesting having yields quarter, backing and volume actually constraints. the away from very What of well. step and some participants able around

pretty hold well. -- so up a significant as holding saw our as up pricing we And in obviously, volumes well increase, our

business So again, managed. is and as said, Susan this Bryan incredibly well have

customers. gaining loyal them very every have day. We We're

And prospects very so bullish this we're time. of over the on

was impacted is impact increased two led massive way average book on up those the went slightly to slight what just because to Due time dwell time. the by system we the a the also I'll that slightly dwell volume of also with in fees a days on quarter-over-quarter. -- yield. whole do add, yield And really

I $XX that's mean taken helpful. -- it I last of look I at then right, net net slide All mean one think kind a more quarter, out. on million. And you $XX talk expenses. million the if about was I that

So you term, continues is level to there years, close continue the get be as more are to to of next -- it you up. last as But go been number look you the has couple leverage longer years where guys? of efficiencies? couple won't as Or to operating the opportunity out you that all great just your for

Yes, Brady, is this Bryan.

the on. look side out, for it driving two that the right operations. in As And there are we our on both existing to and one focused we've things is we making paying services, other business, investments keep compelling think the our products is and on efficiency got in by expense

it. the demonstrated and to as that operate continue so have earlier, many have think we our the drive about BJ said we way we in ability years to efficiency business over And

may XX couple XX or not the last or have You -- we may branches. so closed noted, in of another weeks

that the and trying constantly with we're infrastructure customer efficient sure levels we to high of experience, and most So it providing make we're service doing can.

And not of so that substantial to get all for the of to -- we that about while how for portion, the pay by and our not more I think know demands we've got if opportunity reposition to a for all long term. technology what don't if efficient that, investment infrastructure be, will use think the continuing substantial, we

comes with from Our Vining next question Marty Sparks. Mosby

that always I want kind I of do, walk layered more question to through. a I As of have

really the well are positioned. year, Going First into Horizon

of with low. at companies. seasonal at mortgage kind low kind its of Fixed income You're was cyclical the

kind to then saw and rates two $X.XX So kick interest expected, at should quarter generated quarters, the the are third the the been we've over first those of with what about in seen can the deltas from which quarter kind out have of That's last company. about you seasonality the which growth where of now $X.XX. that of mortgage we're in given in

of up loan allowance, as loss Now offset by been ticking some it's that's well. been

I'll $X.XX. out, that say it's net $X.XX the that you about out $X.XX if or So of

take So couple in through the now and go you you see you if that next a that out. have that as refis now of But dip, of is look through mortgage, quarters could seasonality. seasonality we my burn kind inflection of go thing this to kind point at the of we kind still

had yield income, going still end we down, fixed to at given talked there, all table inverted, relatively look what's have happening that are economy growth flat still little be you much to curves as on you rates of positive you've about. the the as back If your loan in the

are up. rates negative. down, related mortgage the positives, flows, And kicked have in to prepayments came So think those are words, cash other more really I things

in of cash some side. fixed this creating temporary the flow so uptick income And is

the the cause of if level? as of of particular we that if credits go quarters. in level what of new the allowance, when two gotten headwind get So this we because that you that look think charged-off kind the that allowance fixed seasonality, last a we then to the like -- two about with quarter? we mortgage a my at company and has we forward; if three we Or kind look income, three really that's headwind; have have incremental So dynamic an you just went looks the sustainability lastly, really: questions at the of the this those was elevated through just to things trying are

lot a there, Marty. there's So

which reverse have gotten margins rate had they we But and income environment maybe seen. that before, been can maybe on So on FTN, views the the the I would have are two growth But sentiment give loan on wouldn't think down. I and the and If guess they loan from said because Susan offsets, loss are up happened I'll her been we've start more that mortgage the of our would incremental have provision. strong. we've company better, and yes, some countercyclical great

continue in to improve So environment to environment, over our earnings. I as them any or to us kind balances rate of time any continue see counter help economic

just to And continue to around, trying of or say, ahead are and Knowing yes, that, ways working it's let's how reinvest don't of the of So say, to us as a been constantly types to headwind. to We about is which grow but to we kind why our the this able costs to gosh, be allow has figure at do out we we those we more Bryan have that well, sit expenses. to great together here mix, to business totality out any going particularly of I look take be continue necessarily it articulated, to things. business. think like

constantly to are best to and grow. continue that we we'll continue managing do can. And tweaking the to So we

as allowance, on the at I we're take relates our on as quality, we comes, to the book we it asset going adequately quarter point. good reserved. then what's just we Marty. at about -- very And believe And a feel each in this look

charge-offs assuming the conditions for outlook so I'm quarter. did -- And this about the the feel XXXX, if two very and -- the we quarter stable. fourth economic not larger I good remain have

this Bryan. Marty, is

old lining, and The lower -- sure other a the doing thing went rates. day, too the silver were I will has about mortgage dark ebb not We work you you're due quarter We didn't down loans that that to model. every understand all end the have lining was, I'm $X.XX reconciliation. work to I you sort the just up that And yields then cyclical I of ebb in and of silver flow. that And on dark balanced hear -- adage pick through the your cloud at when wouldn't a a mean every hard of has business fixed the business will flow. cloud. understand out business we income that and stuff. I

for see rate what believe activity what those today and environment. of positive outlook to in about Our we we simply customer the because continues be

are there And don't today. so headwinds and there you XXXX sit think described, -- I I as here don't think for we as

kind the more permanent. some more some just could temporary, be of are worry that where was of negatives of Yes. positives these My are --

trying through Thanks. that's willingness you So appreciate to size I was all that. to what But up. go

going bearish here? and they're be on to you from low loan-term fairly And go So rates? down that are this

No. generally to are we going is tick to in What of a rates kind that stabilize think down, going range. but they're

So not going to volatility. there's be much as

at volatility, when you're moderate. look calling So where you your it market

flip of a it's think back this I to is And going once stuck get level. going level. we of kind that in to be into kind

So is going flat. that to yield be curve still kind of The goes low.

stabilizes. positive, it's still at economy, relatively and kind look the direction of you the rates of If

up, anymore. going it's So it's not down. not going down It's going not

have out. you have prepayments on the the you the of kind burn if that, then you mortgage that And really So backside. don't got eventually refis then

duration right it's it. positive piece, while any So to lasting mortgage that it doesn't now have

credit loan in call And at we still Already then the $X was provisioning on we were million last let's only had of year releases was loss range. the, side, thing the reserves. Susan, $X it, million to that --

Now range. we're a $XX to of kind up stepping to million million $XX

quarters of to any higher. get the these things last three of helping margin kind have next, burn let's it, that some looking that two we've over doesn't us drop rates, out at better, allowance quarters. the over the just things call been interest stays in net And the got on you're So of couple of down provisioning then happening, kind those the just

So I was year, Coming out. positioned as teeter I'm not to those perfectly. totter things, a all at into we works wow, I'm that's it. looking the of balancing It's do trying were now. that act the how sure

what that's size up. trying So was I to

these to clearly got things. You cyclical there's stay housing the remains must strong, a consumer the good. ought be because purchase nature. in activity industry as couple we've fairly be And rates But a finance times, bearish as acknowledged countercyclical the if strong, a of whole on we've

I wouldn't be I you negative as are like think sound a there's morning. -- this as you

are Well, to not out negative. Trying particular you. that to things just the balance

So that was the issue First really Horizon. in just

costs generally because stayed credit here. for duration think So I low the positive

every pennies growth, the core growth generating Loan cycle bank stays what doing in So loan the that's still deposit positive. a stays. And growth and couple you're with of quarter.

that. progression that So kind of you're getting underneath

process. last always the just I've First this to decades experienced up Horizon, trying in volatility we've had with. that have over this what three I'm size to deal

I So at. get to trying was what that's

Got you.

just one if I to add Marty think I could. more Yes, thing,

good I got got revenue fixed into discipline. income really at the business. customer loan excellent excellent We've we've key deposit activity from look mix our income business, positive We've fee got in and growth expense We've and growth. positive got As shift growth markets.

right, to up opportunities today, making can to it's and the have see we're and offsets numbers we're advantages continue our in doing earnings we yes, looking hard how put making for sure with returns. that also taking the future what So me not we sure not we're countercyclical solid while to of

that's of core business that more constructive sense that what things I more growth. are when Susan the in trying fact is so added part think the two be The I helpful to on a you I of that Yes. mortgage said lenders, heard was

get coming at look so expense, you If we expense you should the more the are restructurings, some savings. through

So maybe some levers there's burnout to that help kind that you've on this the was anticipating. of compensate for probably backside of some I got

about optimistic Good discussion. We're it.

comes question next from with Our Jefferies. Casey Haire

guys I saw capital. to touch ratio. on you wanted taking I down the CETX

decent us sound And we it layer in you floor Can appetite just sort could You're then you an CECL if you on the hit, below here? average, go Because thoughts does now. that give at loan level. still. some growth like industry the buyback comp X% have on updated of

Just trying thoughts appetite buyback to the what on get your updated is.

Casey. Yes,

runup So last our business. we a as you is And the know, CETX company obviously week of saw in the denominator significant period-end assets. month in loans-to-mortgage

CETX have us that. our week So ran we and I do we to so that's the up that assets period-end opportunities end why And a capital have the of organic before would the the expected, points advantage would have much exactly been like that brought it higher XX quarter probably down basis and to allow X%. levels growth to take of

share our shares good be quarter, customer with opportunistic to really to about We'll support can. first growth. priority always million the But repurchases felt is did we which to if growth loan -- $XX repurchase continue try of and we we So purchase about. in

talked quarter. into And based we prospects we've about loan about fourth the good still what going so on feel today, our

in feel But there, really it quarter put So that'll different in the work to fashion. probably there's right capital good is work. we X% about that we'll primary range put to excess we'll be X.X% that. the we fourth feel in And a if our to are way for any now and

still sounds your accretive It yield. warehouse mortgage the yield. loan to on follow-up one just And Great. Okay. like it's

to guys of on has the I So more that as if with to guess it's you XX, your Slide that growth? point deal funding NIM, out dilutive side

to let's the yield since about LIBOR loan about the think Yes. it duration. funded, talked X.XX% the that easiest we month short one it, such just call is it way I mean has

you WACC And the if that right calculate do it on we margin. our how And just that's below it's slightly for math, so or total.

Jennifer from comes Our next Demba question with SunTrust.

actually on Steve Jennifer. for It's

progress. Nashville are loans growing there? and wanted guys deposits you of have So for further? to I it check up any goals Do your just kind growing on How

Bryan. is This Yes.

economy the a is been couple markets the engine and the And a still has our in space. growth acquisition we good, good Mid-Atlantic, Tennessee Middle really It's of banking. continue of one our successful We're We Houston the We and place Florida have in very there. that led job of mentioned in Middle handful Yochem commercial, good it's fantastic And growth customer I'll that all a opportunities and customer a good It's growth state region, very doing we job. client to also in private tremendous strong been those and emphasize, Tennessee. we business I that Tennessee into see add Carol market. a growth for whole. team of have have as doing earlier, of those. others by seeing

be music business to industry continues Our good.

to our the quite some these we're well bright So spot while. we be growth of other as Tennessee ability very optimistic to for continue about markets. going a think And as that's a Middle

And bit a kind I little Perfect. on wondering but have there. are kind may just you you something guys talking mean interest. at of know what thinking you're merger do I the of all? not just big, multiple to

Well, to the and it ability BJ we comment strong. several as Putting buy those shareholders. growth, capital to buckets supporting out And look, we've back customer And very in buckets, we a which seen an very simply over we customer or sheet last are look has seen at pointed ever have balance it to the strong continued stock. it be earlier, work M&A quarters, capital three in activity, base, repatriating we've context and three some growth to have and can't specifics. And on generation. we

we'll So be smart those we how capital. opportunities, about all to try continue and manage evaluate of to

from Marinac question Our Montgomery Janney with Christopher comes next Scott.

go back than here. And points then other into little necessarily? down Slide you to with a in on basis think year? continue have XX next discussion be I momentum beta that the the the If XX. the businesses want that have bearish more gets you better margin to Would the world you the do

what if been curve multiple do are points, of so more beyond, deposit get looks rates. like pricing bit let's say, cuts than Chris, think, basis rate even in short- the long-term there would managing in so I have banks more and they I that yield think because on my the XX a opinion, aggressive,

XXX kinds further XX I opportunity beyond there very would been and fund from I one to futures cut at But know would four the have be futures August reductions earlier, another basis going quarters. next you not today think It's here October what's of about sentiment said one map. I be over all year. all over And yes, points basis imply in heard until next interesting. So Fed of of points. Like the the well. as look only I've it as

So it's hard to tell.

to are mitigate those pricing loan We mix And way strong, can. it well. as as businesses we're growth, it healthy managing as using possibly the manage the sheet can as countercyclical to well doing offsets and we we well trying things. that to is possibly provide can we And discipline deposit as balance those

So we're how see we'll it we positioned. like but how works,

helpful. That's a Great. And then just follow-up. quick

quarter. what just look it last business best operating to at income fixed the look happened not at -- year-over-year On be leverage the would and

Just have had a from -- good you it leverage seem year to operating at ago. looking

Yes.

Again, earlier, job great rule cost So there Chris, generally on now. revenue probably the incremental possible. like has I pretty right eliminating think a a done thumb, in enabling I is margin as good of mentioned as business speaking, wasn't out a much team of that the customer XX%

So good be point margin to a at. XX probably basis look would way

Holland Garrett with comes next Our Baird. from question

yield which the in portfolio too? yields the it's maybe come securities you And the where loan where that do on sense a stabilize? for given expect new as lower bit growth. trended makes money in But portfolio, strong bit to recent the are First, has quarters, securities a

Yes.

$XXX was loan on know, you of down, I quarter. So seeing as we're this demand. in It's said, it what don't based, terms million

side. rather money to So the on put we'd work loan much

continue. Yields been than speaking, growth generally most In portfolio, we're securities. seeing in aggregate lower, cash the now just securities mostly We to back loan what expect and portfolio we've the modestly. reinvesting generally the right into for part, flows mortgage-backed are

the you So see doing, and with as been they've down the you the our in at yields supplement coming financial if imagine curve. modestly what look yields rates yield section, you and might see, are can you can

see a reinvestments It'll in securities based just So the our I we of have, change manage don't how a impact much and strategy portfolio. to we nor what on kind be demand loan have. material

relative I going and And attractiveness helpful. funds to rates as deposits lower? mix the your That's forward, those move on thoughts get of specifically, wanted deposit index market do

Yes.

costs were were down. they interestingly, deposits. deposit of want headwind, deposits term, clearly rates tailwind we So index a versus come terms up. going They they as a are as in market customer Long

to So we will down deposits. those customer continue as build manage continue to we

and saw, this You they our saw in coming from up, do facilities. sending into that's more money have we the cash we actually brokerage though, contracts quarter excess firms because were that with,

So that at cost, manage And happens. term, fund we'll lower down that levels. it long try But these our it helpful to growth helped from was to to to continue so loan us.

with today Securities. last question Our Shaw comes Fargo Jared from Wells

Braziler This in for Jared. filling actually is Timur

frame the the mentioned one that'd utilization on you remarks prepared be you that environment ex comment just more on Are can provide that Bryan, any in of mortgage the down? kind from that Just side, great. operating commercial you can your seeing slowed me, additional warehouse You that somewhat, color business, rates are has comment.

It's to bankers just sense customers. Yes. talking talking a our of really to customers and

It's And standards, not so sort was. historical as measure. it growth, which consistent by with good. It's not a great as is it's is, scientific job of

consistent growth with economy that's dialogue and see the having we're the that And falling. customers. our GDP You expectations around with

As pointed what read my and -- continue slowed business. out, we sense. and see from we has of continue do anything but bit. negative I as acknowledge we do be would balance said, Southeast a or think that industrial. customer be said, leaning. be and The a to as you the some forward ISM, That I it or relatively sheets still may into services And little don't either strong we where customers -- against we that they hear backdrop, it as strong And geographic is would is in to

growth somewhat to XX not all, to to economy. where place So a all look, to of the continue our if or slower day, two, optimistic remain a bad end And we've been ability we're XX still we relative in the down grow three in last about the from years. for that's at

still we're fairly optimistic. So

at add, the I and look broad-based would just that we're seeing. look just our numbers growth at

Bryan we a And we're across key that there. there, think great the we So markets in, there as business our be the people. across out lines, have are discussion lot and said, are still all that but very of sentiment might of growth the numbers prospects strong

to the our about ability optimistic we're to so firm. grow And continue

that Look, are politicians means they're that at too, the yield going and the people impact of how But and balance or quarters. at point, so. this a the don't don't tariffs say the big on That's ourselves And and businesses. end weigh out about curve recession, inverted end think interest continue it's day and are bad we've of of all a balance, day down Not to talk extent. and several fairly trends sentiment be is sheet to next customers everything some consumers told they're don't good. they're long, to rates over whether we and But into of the the whether running we day, do think talked the we the at that recessionary to track. momentum

would turn back the This I concludes to remarks. like our Bryan over for question-and-answer conference session. to closing Jordan any

anything and Thank on. communities. our building colleagues up business our you and you appreciate to work very any for doing questions you want quarter. or our We that Eiley. the in you, that know again all you everybody, let Please follow Thank joining and great call interest your company Thanks, for customers morning. Thank us of building our if our have much. this are our our you further

for attending The Thank concluded. presentation. today's has now conference you

disconnect. now may You