First Horizon National Corp., the parent company for First Tennessee Bank, fought economic and regulatory headwinds in 2013 to come out ahead, earning $23.5 million, or 10 cents per diluted share in 2013, compared to a loss of $27.8 million, or 11 cents per share in 2012.
Though the bank is bringing in less revenue overall due to a lack of demand for loans and a regulatory squeeze on its fees, a combination of slashing expenses and quality lending is positioning the bank to increase profits as interest rates rise, officials said.
"When rates rise, we'll make a lot of money on that with little cost to it," said BJ Losch, executive vice president and chief financial officer of First Horizon.
Net interest income for the year declined to $637.4 million from $688.7 million in 2012, though expenses also fell, with non-interest expenses decreasing to $1.2 billion in 2013, compared to $1.4 billion in 2012. Total revenue declined to $1.22 billion, down from $1.36 billion in 2013, as lower interest income and reduced fee income combined to pressure the company's top line.
The bank is still working to offload loans it made from 2000 to 2008, which will conclude in the first quarter of 2013, and new loans aren't yet picking up the slack.
In the fourth quarter of 2013, the bank earned $49.1 million in net income available to common shareholders, or 21 cents per diluted share, wildly outperforming results from the fourth quarter of 2012, when the bank lost $107.5 million, or 45 cents per share.
The fourth quarter results were 3 cents per share above analysts' expectations despite lower-than-expected revenue. First Horizon shares closed Friday at $11.93 per share, up 5 cents per share.
"I think our core earnings were solid for the quarter," Losch said.
In Chattanooga, First Tennessee remained a market leader, growing loans 4 percent during the year, said Keith Sanford, market president for First Tennessee.
"We're still continuing to try to serve our customers and make it easy to do business with us, and because of that we're able to grow some loans and take some business away from some of the competition," Sanford said.
The bank celebrates its 150th year in operation in March.