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First Horizon sees steady NIM despite rate pressure, searching for larger M&A targets


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First Horizon sees steady NIM despite rate pressure, searching for larger M&A targets

executivessaid they believe they will be able to hold the company's margin steady throughthe rest of the year.

Despiteexpectations for a continuing low rate environment that will pressure margins acrossthe industry, First Horizon's CFO and Executive Vice President William Losch IIIsaid during the company's second-quarter earnings call that the company expectsto avoid margin declines.

In responseto an analyst question, Losch said that the margin is likely to be "flat"moving forward if rates remain at low levels.

"Wethink that we can defend the margin pretty well. If you look over the last few yearswhat our margin has done … it's stayed pretty steady," Losch said.

"That'sa testament to our bankers' pricing discipline, looking at the mix of our portfolioand most recently moderating our asset sensitivity as we've gotten less encouragedabout rates going up anytime soon," he added. Losch said the company is modelinga rate increase in December, but said it would "do little" for the company'sNIM or income in 2016.

The company'smargin rose 4 basis points quarter over quarter during the second period at 2.92%.

FirstHorizon Chairman, President and CEO D. Bryan Jordan also discussed the company'sappetite for mergers and why it is looking for larger transactions even though manysmaller banks may be looking to exit amid a difficult operating environment.

"Westill have a preference to do larger transactions, principally because of the calendarchallenge in terms of how long it takes to get through the approval process, thefact that it's important to get the integration done properly and the amount oftime it takes to do that," Jordan said.

"Ifyou're going to invest the time and the process it requires to do M&A, it'smore efficient to do it in a larger transaction," Jordan said, though he saidthe company will consider smaller deals that seem attractive.

FirstHorizon reported EPS of 24 cents for the second quarter, compared to 20 cents inthe first quarter and 22 cents a year earlier.