COST CUTS PAY OFF

First Horizon Corp., parent company of First Tennessee, reports profits rose almost 10%.

First Horizon National Corp. on Thursday reported quarterly profits rose 9.5 percent, a gain that surprised analysts.

First Horizon is the Memphis owner of First Tennessee Bank, the city and state’s larg- est homegrown bank with loans and assets of $23.9 billion.

Revenue of $298 million for 2014’s first quarter was down 6 percent from the same quarter last year, while net income rose to $44.8 million, or 19 cents per share of stock, compared to 17 cents a year ago.

Wall Street analysts had forecast earnings of 15 cents, a level the bank beat in part by cutting expenses and lowering charge offs and the provision for loan losses.

Income for the first quarter was down 9 percent from the $53.9 million reported for the last three months of 2013.

The up-down quarters suggested the only regional bank still headquartered in Memphis is not trending strongly one way or another, but holding steady.

“You’ve got an economy that’s recovering but not growing leaps and bounds yet,” chief financial officer William “B.J.” Losch III said. “A low-interestrate environment ... can be good for borrowers, but for banks it puts a lot of pressure on our revenues.”

In such an atmosphere, First Horizon is doing the things it can control, he said, like being mindful of expenses.

Asked to cite actions the bank took during the first quarter to cut expenses and become more efficient, Losch responded: “Things like how we underwrite a new commercial loan versus a renewed commercial loan. For a new loan, you want to spend more time on it. You may not know the client as well; you’re not as familiar with their financials.”

When considering a loan request by a regular client, Losch said, the bank will try to accelerate the process.

“Our turnaround time (for renewed loans) hasn’t been as fast as we want in certain instances,” Losch said. “Not only

do we take cost out of the renewal side, but also turn decisions around faster for those customers.”

The bank has identified 133 separate processes it is trying to make more efficient to save money and provide better service, Losch said.

Loans by the bank in all its markets totaled $15.1 billion in the first quarter, down 5 percent in a year and 2 percent below the fourth quarter of 2013.

Asset- based lending rose 12 percent, lending in Middle Tennessee rose 6 percent, commercial real estate lending rose 4 percent, and lending in North Carolina, South Carolina, Virginia and North Florida rose 4 percent from the first three months of last year.

First Horizon stock rose in morning trading Thursday but then trended down to close at $11.24 per share, 40 cents below Wednesday’s close.

Bank executives described First Horizon’s core businesses — regional banking and fixed income through FTN Financial — as turning in a “solid performance” January through March.

The company “continued to invest in those businesses while controlling costs and improving productivity and efficiency.

The company also continued to unwind from the

You’ve got an economy that’s recovering but not growing leaps and bounds yet.” William “B.J.” Losch III, First Horizon National Corp. chief financial officer

troubled mortgage business it sold in 2008, with key mortgage loan repurchase settlements reached over the past few months,’’ the company states in its earnings release.

In early 2009, First Horizon had about $9 billion worth of loans in that segment, Losch said. Now, it’s less than $3 billion.

Brian Jordan, First Horizon’s chairman, said in a prepared statement, “Our people are focused every day on meeting our customers’ financial services needs with a differentiated experience, and because of that we’re earning new business and expanding our relationships with customers at First Tennessee and FTN Financial.

“We’re entering new markets and enhancing specialty businesses that are giving us opportunities to grow profitably over time. We’re reducing the overhang of our former mortgage business.’’

First Horizon employs 4,300 people, including 2,300 in Memphis. It has 170 First Tennessee Bank