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First Horizon National (FHN)

Q4 2010 Earnings Call

January 21, 2011 9:30 am ET


Greg Olivier - Chief Compliance Officer

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Bryan Jordan - Chief Executive Officer, President, Director, Member of Credit Policy & Executive Committee, Chief Executive Officer of First Tennessee Bank, President of First Tennessee Bank and Director of First Tennessee Bank

Gregory Jardine - Chief Credit Officer

William Losch - Chief Financial Officer, Executive Vice President, Chief Financial Officer of Bank and Executive Vice President of Bank

Aarti Bowman -


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Ken Zerbe



Good day, ladies and gentlemen, and welcome to the First Horizon National Corp. Fourth Quarter 2010 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to host, Ms. Aarti Bowman of Investor Relations. Please go ahead.

Aarti Bowman

Thank you, operator. Please note that our press release and financial supplement, as well as the slide presentation we'll use this morning are posted on the Investor Relations section of our website at

Before we begin, we need to inform you that this conference call contains forward-looking statements, which may include guidance involving significant risks and uncertainties. A number of factors could cause actual results to differ materially from those in forward-looking information. Those factors are outlined in the recent earnings press release, and more details are provided in the most current 10-Q and 10-K. First Horizon National Corp. disclaims any obligation to update any forward-looking statements that are made from time to time to reflect future events or developments.

In addition, non-GAAP financial information is noted in the slide presentation and may be noted in this conference call. A reconciliation of that non-GAAP information to comparable GAAP information will be provided as needed in the footnote or appendix of the slide presentation available in the Investor Relations area of our website. Listeners are encouraged to review any such reconciliations after this call. Also, please remember that this webcast on our website is the only authorized record of this call.

This morning's speakers include our CEO, Bryan Jordan; our CFO, BJ Losch; and our Chief Credit Officer, Greg Jardine.

With that, I'll turn it over to Bryan.

Bryan Jordan

Thank you, Aarti. Good morning, and thank you for joining our call. Fourth quarter and full-year 2010 demonstrated our continued strategic progress. We made significant headway on our key priorities and goals for the year. We returned to profitability, significantly improved credit quality, structured our balance sheet for growth, repositioned our core businesses and repaid TARP while maintaining our strong capital position.

During 2010, pretax income increased from 2009 driven by solid performance of our core businesses. We're pleased with our 2010 accomplishments and feel good about our 2011 prospects. In 2011, our focus will be on growing our businesses, improving productivity and efficiency and continuing to proactively deal with credit. We're encouraged by the recent signs of an improving economy, but we expect a slow economic recovery, and low interest rates are likely to persist.

In this kind of environment, controlling cost is important. We spent the last year making investments to become more efficient. We've upgraded systems and streamlined and improve processes. We'll continue with these efforts in 2011, as BJ will discuss in a few minutes. But the bottom line is, we're starting 2011 as a more productive and efficient company, and expect to make additional progress this year. We've also been taking steps to ensure that our core businesses of Regional Banking and Capital Markets are positioned to take advantage of opportunities in an improving economy. Again, I'm pleased with the progress we're making and believe we're beginning the year with competitive advantages.

Customer service will remain a primary focus in 2011 as we work to deepen and expand our customer relationships. Our efforts are already paying off with average core deposits up 9% in 2010 and net checking accounts growing 2%. New consumer loan production was up 5% from last year.

Although our Non-Strategic loans continue to run off, the Regional Banks' loan portfolio is benefiting from our sales force and active calling program. During 2010, we hired 20 bankers and made 34,000 outbound calls to commercial customers. Our loan pipeline has stabilized. We've started to see C&I growth driven by our corporate customers, particularly in asset-based lending where loans were up 11% from last year.

We're also seeing opportunities in commercial real estate, as we have capacity in this asset class. Pricing terms are favorable in the CRE sector as we book loans with experienced borrowers with good track records. We will continue to actively pursue new business in 2011 while maintaining credit and pricing discipline.

Turning to our Capital Markets business. We expect continued strong returns in 2011. Over the past year, we've added new accounts and made a number of strategic hires that should help further expand our extensive distribution platform. However, fixed income revenues are likely to continue to reflect the normalizing of market conditions.

To sum up, we believe we're on our front foot for 2011. We recognize that the operating and regulatory environments present challenges. Out of these challenges will come opportunities, and we're set to take advantage of the opportunities. With our industry-leading capital ratios, we have the flexibility to deploy capital, take advantage of both internal and external opportunities.

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