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First Horizon reduces NIM outlook on expected Fed rate cuts

Memphis, Tenn.-based First Horizon National Corp. lowered its net interest margin guidance to 3.25% for 2019 based on expectations of two additional Fed rate cuts and the decline in LIBOR, the bank's management said on the third-quarter earnings call.

"Fed funds futures have been moving all over the place," CFO William Losch III said on the call. "But, as of this morning, the futures actually imply only one rate cut the rest of this year in October." Still, the bank continues to be "conservative" in its approach and assumed two rate cuts.

First Horizon expects some of the drop in NIM to be offset by countercyclical products, such as its loans to mortgage companies increasing as lower rates drive volume. "Our unique business mix is providing the expected countercyclical offsets that others in the industry do not possess. That helps support our overall earnings," Losch said.