Wall Street can pivot from problem to problem almost instantaneously, but for now at least it looks as though analysts and investors are in a calmer place with respect to bank credit risk, and have instead turned more toward issues like weak revenue growth prospects and limited operating leverage possibilities across the space. That may actually be a benefit for First Horizon (FHN), as I still see some legitimate questions on credit, but I believe the integration and synergies from the Iberia deal will boost the near-term growth opportunities.
Organic revenue growth is going to be a challenge for almost every bank over the next few years, but First Horizon does at least have an expanded franchise in some of the fastest-growing areas of the country, not to mention a healthy counter-cyclical capital markets business and an expanded mortgage banking operation. The pandemic and recession are likely to stretch the timeline for realizing the hoped-for synergies from the Iberia deal, and I’m still concerned about credit, but all in all I think First Horizon is in good shape, and between above-average upside and a high dividend yield (obviously the two are linked), I like this stock for more risk-tolerant investors.
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First Horizon Sounding A Little Better On Credit, With Integration Opportunities Ahead
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