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First Horizon expects to see significant benefits of merger from Q1'22

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First Horizon expects to see significant benefits of merger from Q1'22

First Horizon Corp. expects to see significant benefits of its merger with IBERIABANK Corp. starting to come into play in the first quarter of 2022, as it targets February to complete the integration.

"I would say that you will start to see the significant benefits of the integration starting in the last part of the first quarter and clearly picking up on the cost savings side in the second quarter of 2022," CEO, President and Director D. Bryan Jordan said in an investor call Oct. 20 discussing third-quarter earnings.

First Horizon has thus far identified approximately $35 million in annualized revenue synergies tied to the merger, especially from commercial loans as well as from debt capital markets, mortgage and private client wealth. Noninterest expense is projected to decrease in the low single-digit range, although it was up $11 million in the third quarter driven by higher tax credit-related contributions, said interim CFO Anthony Restel.

First Horizon would not prioritize further M&A. The bank currently has $89 billion in total assets, and "you don't just sort of stumble across [the] $100 billion threshold," Jordan said. Regional banks between $40 billion and $100 billion in total assets have been actively pursuing M&A following 2018 legislation that removed stress-testing requirements for banks under $100 billion in assets. But at this stage, First Horizon will focus on deploying capital across its franchise post the integration, and it aims to eliminate the vast majority of any technology deficits that have existed.

"Scale matters but it's not the only thing that matters," Jordan said.

First Horizon posted $492 million in net interest income for the third quarter, which declined by $5 million, or 1%, from the second quarter. Noninterest expense increased by $29 million to $526 million quarter over quarter.