First Horizon Corporation (FHN) Earnings Call Transcript & Summary

Good morning, and welcome back. I'm excited to introduce our next speaker. We have joining us Anthony Restel from First Horizon, who, as of 1st November, assumed the role of President of Regional Banking for the bank, while he continues to serve as the interim CFO until the bank looks for a successor. Anthony, previously, was the Chief Operating Officer for the bank and was heading the integration efforts as First Horizon closed on the transaction and merger of equals with IBERIABANK. So joining Anthony, we also have Ellen Taylor, who heads the Investor Relations function and is ready to jump in, as needed. So Ellen, thanks a lot for joining us as well.

And Anthony, maybe just to kick things off. It was 2 years ago exactly, at this conference, I think, the IBERIABANK/First Horizon deal was announced. The deal transaction was closed during the pandemic. Just give us an update, like there's been a lot that's happened over the last 18 months, I understand you are to push out the systems conversion because of weather-related issues. Can you give us an update, in terms of where the franchise stands today? And as you think about capitalizing on growth opportunities across your markets, maybe if you could start there.

Yes. Let me back up a little bit and talk a little bit about, kind of, where we are and what we're seeing, right? So [Technical Difficulty] tell you is -- we are starting to see the benefits of our more diversified business model, particularly in our higher-growth markets, starting to emerge. If you look at the performance we saw in the third quarter, particularly, right? We saw some real strong growth, particularly out of the commercial side of the business. We grew at about 2%, when you exclude the PPP during the quarter, which I think was pretty solid growth. When you look at where the growth is coming from, asset-based lending, equipment finance, our franchise finance continue to put up some really nice growth numbers. And then certainly, we still have some paydowns that we're having to deal with, like everyone else. The paydowns, kind of, are coming primarily, on real estate type activity, the commercial real estate portfolio and some mortgage activity. If you want to talk about specific markets, I think that you can say that we've seen really, some strong momentum in our higher growth markets, particularly in the Florida, Georgia, Texas, and then some of our all-core IBERIABANK markets, Louisiana, Alabama, continue to do pretty well. As we've moved through the year, we've kind of come through the kind of COVID period, we are starting to see some normalization of our traditional banking businesses and I'll call it, return to normal. When you look at, kind of, wealth and part fees, those are kind of doing their normal trends. And so I would tell you that we look at the value proposition and the strength of the 2 companies coming together with the broader product set and the solutions that we've got. I think that we're actually starting to see some real momentum start to build. I think, we're able to remain nimble and focus on the key segments, where we think we can differentiate, relative to peers. Overall, on the MOE, in particular, I'll tell you that we continue to prepare for the systems integration in February. And so of course, that covers the waterfront from aligning products and our capabilities to including rolling out some new products. So remember that as part of our, I'll call it, "get ready to go to a consolidated platform", we did take the opportunity to do some significant upgrades, in terms of feature functionality, to improve the overall client experience as well as our associate experience, in terms of what can we deliver, in terms of an overall positive move for our clients as well as our associates. We've completed several mock conversion events, and we've done a bunch of conversions ahead of time. So just as a reminder, we did take the approach, which would be a little bit different from most integrations as we've decided to, kind of, break down some of the conversion into, I'll call it, various pieces and parts to do some early work to take everything. So we don't have that big bang approach, right? So our wealth platform, our trust platform, our credit cards, our mortgage system, our phones, our e-mail, all of those items have already been converted, and so we're all on one platform. So again, trying to pull as much off of that conversion we can so it doesn't have the big bang approach. Hopefully, we can, kind of, keep all the noise to a limited level. I mentioned our investments in technology that we've made over the last 18 months or so. And so those investments in technology are really, kind of, geared to continue to drive revenue synergy as well as focus on expense efficiencies. We recognize that over the years, we really need to improve our overall cost of delivery and drive that down. We are starting to see some nice revenue synergies, part of the deal. I'll remind everyone that we really modeled $0 from a revenue synergy as part of the deal model. But I'm happy to say that we've already realized about $35 million in annual revenue synergies as part of the combination. Those revenue synergies are largely tied to commercial loans. But we have seen some fee income, particularly in the debt capital markets, some wealth fees as well as international fees come to play. On the cost savings side, we're at $96 million of our committed $200 million target. So that $96 million is, kind of, an annualized run rate number through the third quarter. We do expect that we'll see, kind of, a ramp in the second and third quarter, post the systems conversion. And we're very confident, we'll achieve the $200 million run rate by the fourth quarter of next year. And so I think, as we, kind of, move from that and we, kind of, look really -- try to get a little bit behind the conversion talk, and I'm sure you'll have some questions for me about it in a minute. But our focus is really on driving efficiencies and identifying opportunities to redeploy our capital, that excess cash that we've got, into higher growth kind of return opportunities to, kind of, help us provide business momentum, moving forward. Obviously, we're super focused on the things that we can control in the interim, like our deposit costs. So we've continued to push deposit costs down with the goal of really achieving at a minimum peer median kind of level, from a deposit standpoint. We've talked about our need already, to improve efficiency, but that's an item that we talk continuously about, within the company. And then certainly, we'll continue to make prudent investments in technology to support our dynamic digital needs of our clients and our associates, as we move forward. From a balance sheet perspective, our credit quality and capital position continues to be extremely strong. We are continuing to be prudent and kind of working our capital base. So we've been very active, from a common stock repurchase perspective. The Board increased the authorization by an additional $500 million in the third quarter. So that pushed our capacity up to about $750 million at the end of October. And so if I look at where we are, I think, we're positioned very well. We're in 15 of the top 21 high-growth markets in the Southeast. I think, we've got products that help us compete with the very large banks that are in our footprint, but our market-centric delivery model gives us an ability to deliver, I'll call it, that level of sophistication with the personal touch that our clients really enjoy and help deliver that growth. So overall, I think we're very well positioned, and I would be remiss, if I didn't say that we are very well positioned for a rise in rates, which is something a lot of people have asked me about. And so I'll just say that at a 100 basis point parallel shock, if that were to happen, based on the third quarter kind of numbers, we think that would result in about a 16% higher NII or about $300 million in the next 12 months. So with that, Ebrahim, I'll go ahead and kick it back to you and see if I covered what you want me to hit there. So that was kind of my opening commentary.

I was like you can just wrap it up now. Like you said, it needed to be said. So -- but no, thanks for that. I think, maybe if we, sort of, break some of this down a little bit and drill into it. So one, as I mentioned earlier, you assumed the role of head of regional lending, which, from what I understand, outside of some of the specialty lending areas, includes all the markets. Give us a sense of, one, just at the bank level, what are the marching orders as you think about what the bankers are focused on and tie that with what's the customer sentiment? Like are you seeing increased demand coming through? Or are we still waiting for those green shoots that banks have talked about, to translate into real borrower demand?

What I'll tell you is that the current -- I'll call, our marching orders for the bankers, are really twofold, right? Up until conversion, they are very busy, in terms of training, customer readiness, as well as just kind of keep in touch with our clients. But I would say there's a huge focus to make sure that we are handholding our customers and getting them all ready for conversion and doing all those kind of things. Beyond that, right, the message is pretty clear, is, one, is to build business momentum. So if you can imagine as an institution, we've been a little bit inwardly focused over the last, call it, year or so as we've, kind of, worked up to the conversion. Our big objective is to move from being, I'll call it, that inwardly-focused orientation to being more front-footed. So build business momentum, looking to do some significant recruiting. I'm very proud to say we've added 3 new market presidents in the last couple of weeks, which is very exciting for me, and we continue to recruit very well, but I want to see that continue, and then performance management, right? So we've certainly got some objectives, in terms of growth and profitability. We want to track down and run down next year. So those would be the objective. Relative to business sentiment, what I would tell you is we are seeing some, I'll call it, some positive momentum, relative to our customers. And so I would say there seems to be some ease, I'll call it ease, but I'll call it, as we kind of feel a little bit better about COVID, it seems like activity is starting to pick up. And so we've seen some really particular strength in some of our, I'll call it, legacy markets, that have always been good for us. But I mentioned Alabama and Georgia, Louisiana, Texas, South Florida, have always been strong, and they continue to be real strong. And then obviously, working as, I guess, as a counter to that, right, we still see some moderation within our energy portfolio, our CRE book as well. So I think, when I look at, kind of, where our customers are seeing and what's going on, I think we feel pretty good about things, overall. I'd remind you that our pipelines, I think, is probably the best leading indicator that we've got, that continue to build. Just as an example, pipeline was around $500 million or so, I'll call it, in the first quarter, and then that, kind of, doubled, relative to where we saw in the third quarter. And that's, kind of, our high confidence of closing pipeline, and those numbers continue to build as we, kind of, move forward. So all things appear to be pretty, pretty good, in terms of activity and what our clients are seeing and just what we've got. If you say what are kind of the negatives that, kind of, hold back loan growth for us. Obviously, we're very proud that we've kind of outpunched our weight, in terms of PPP origination. Unfortunately, that was great, when we were doing it, but it creates a little bit of a headwind as we -- as we unwind those portfolios. And then certainly, you've got mortgage paydowns and other things that are industry-wide, everybody is dealing with, just as a factor of low rates.

Got it. And I guess, as you think about -- just across your markets, you mentioned Georgia. From a geography standpoint, are there any pockets where you know you don't have a presence, where you're actually looking to hire and recruit? Or are you essentially in all the MSA? If I remember the old IBERIA chart used to highlight the 30, 35 MSAs across the Southeast, where the bank had a presence, you add on the First Horizon franchise. Is there anything really missing, at this point? And where are the hiring efforts, in that regard? Is it certain industry verticals? Or is it certain geographies where you are looking?

It's a little bit of both. Ebrahim, what I'll tell you is, I don't think we're looking to necessarily expand the geography beyond what we've got covered. But certainly, within the geography and within our existing verticals, there's an ability to increase the overall talent that we've got available, to kind of drive the businesses, right? So as I mentioned, we just hired some new market presidents. We hired 1 in Dallas, 2 in -- 2 in the Triad region in North Carolina. And so those individuals will help us even recruit further. And so again, existing markets that we've got, we're fairly small in share. So again, the dynamic of hiring great individuals with connectivity to those markets to help propel the business model, should work really, really well for us. And we're having some great success. Relative to the verticals, we're always looking to, kind of, enhance what we've got, relative to, what I'll call, the players on the field, but not necessarily looking to expand geography, just looking to, kind of, complement the team with more people on it.

Got it. Got it. I guess, just pivoting to asset sensitivity. If I heard you correctly, you said 100 basis point rate shock implies 16% NII upside. Unpack that a little, is most of that sensitivity tied to the short end of the curve, number one? And then, what are you assuming, in terms of the balance sheet, based on the asset side and deposit betas?

Yes. So what I'll tell you is, this is, as of 9/30, right? So just to kind of -- it's a static balance sheet, right? So not assuming a whole lot of shift within the mix of the balance sheet. And certainly, that can come into play a little bit, as we think forward. What I'll tell you is, if you look at our business model, right, the short end of the curve is most important to us. If you look at our lending mix, almost 2/3 of our loan book, I think, it's 63%, is floating, to be specific. And then, when you look at that floating, that 63% of the loans that are floating, 85% of those are tied to LIBOR, right? So that's going to be the biggest driver for us, on the asset side. And then certainly cash [written] at the Fed at 25 basis points is also a huge bucket of money for us. That would have a huge impact. We model, Ebrahim, a 30% deposit beta through the first 100 basis points up. My expectation would be is that for the first couple of moves, it would be virtually 0, and then it would start to probably, accelerate. The one thing that makes it a little bit unknown is, our overall liquidity system will probably help a lot of banks, in terms of being slower to move, just because everybody is so flush with cash. Nobody is really worried about losing a little bit of cash. And so I would think that, from an industry perspective, I would think deposit betas will be significantly lower than what we've seen, historically. So -- but we're modeling 30% through the first 100 basis points.

Got it. And how are you thinking about just cash deployment for excess liquidity, on the balance sheet? Is there an absolute level of interest rates, where the 3- or the 5-year of the curve need to be, before you start putting money to work?

No, not really. I mean, look, we made the decision, last quarter, to put $1 billion of incremental securities into the bond book just to help offset just the cash build that we've got. And so we've got a little bit more of that to get completed. We'll have that wrapped up by the end of the fourth quarter. Once we get to that point, that's early next year, we'll step back and reevaluate, not only where we think interest rates are going, based on kind of market sentiment. But our cash position as well as what loan growth looks like. We may or may not choose to put more to work in the investment portfolio, but more to come, right? So we've looked at it and said, "we recognize that we've got a tremendous amount of cash". But at some point, right, I think, us going out and just dumping it into the investment portfolio, is not necessarily the right answer either. So again, we'll reevaluate, once we clear this first $1 billion that we're putting in between the third and fourth quarters, we'll take a relook at where we sit in the first quarter, next year and decide, if we want to do some more.

Got it. And just going back to asset sensitivity, the 1 pushback, I often hear, is you've got 2 countercyclical businesses, which are great, when things are going south and rates are going lower for the warehouse and the capital markets. Talk to us, in terms of, is the concern that, "okay, some of that sensitivity is going to get offset by a slower capital markets business, a lower mortgage warehouse balance". How impactful are those two, relative to offsetting the earnings upside from rate increases?

Yes. It's an interesting thing, right? And so certainly, there is some offset, right? What I'll tell you is, we already are starting to see some moderation within those businesses, right? So if you look at the performance versus in the second to third quarter, they started to moderate a little bit. And so my sense is, certainly, they have a little bit of a, probably, negative impact to the overall NII improvement. But I don't think, it will be that detrimental. Both of those businesses understand the dynamic of as we shift from a very active environment into, maybe something that's a little bit softer, is that they continue to work to make sure that they maintain profitability for us and don't become, I'll call it, big drags, as we move forward. So they'll continue to moderate, at least from the fee business side, but I feel very strongly that they'll continue to put up at least some level of profitability and not be a drag to the overall company. Relative to the mortgage warehouse business, we did proactively, kind of, change and do some things different to make sure that we are able to maintain some balances within that [indiscernible] and it just doesn't all dry up. So we did some volume pricing, discounting type programs, which helped us really pick up market share during the third quarter, in a declining environment. So I would tell you that we feel pretty good about the loans-to-mortgage companies, in terms of what we'll see there. It will probably decline a little bit, but it shouldn't go back to what -- maybe where we were, prior to, kind of, this current ramp up. So again, we'll see some pullback against that NII number, but I don't think, it will be that material.

Got it. Got it. And I think, just going back to something you mentioned, Anthony, and you talked about this on the third quarter call, was you need the systems conversion to go through in the first quarter before there's a lot more in, sort of, cross-selling efforts. When you think about this bank, with First Horizon close to doubling its assets, coming out of this deal, you are, sort of, competing in a different asset-class segment going, maybe after a larger client. Just talk to us about that opportunity, both in terms of the lending side and also in terms of cross-sell, be it taking the IBERIA Mortgage business and sort of expanding that through the First Horizon franchise or the First Horizon Capital Markets business and expanding through the -- that through the IBERIA footprint?

Yes. Look, so this goes right to the heart of revenue synergies, in terms of what's possible from the larger balance sheet as well as the deeper and broader product set. So clearly, the balance sheet offers us the opportunity to, I'll call it, lend more to our really high-grade customers that we've got, customers that are true-relationship customers that either bank probably, historically, got to a point, where maybe we were, I'll call it, tapped out from an aggregate exposure. So there is some capacity that's been generated, relative to the customer base of both historical banks, just relative to being a much larger bank. And so I think that's a very positive. And we are using that, where appropriate. We're not looking to take a, I'll call it, outsized [hall] positions for the sake of trying to get loan growth. But to the extent that we can take more for our good clients, to kind of, lock up core relationships, we're willing to do that, and we see a lot of success in that. We've had some good success, leading some reasonably large, syndicated transactions for our IBERIABANK clients. That's something that would be new that IBERIABANK, historically, hadn't been able to do. And so we were able to do -- we got our first, I'll call it, large syndicated, where we were the lead on a transaction, done. I think, in the third -- was in the third quarter. And so that's very positive news, in terms of really using the backbone and the infrastructure that First Horizon brought over to the legacy IBERIABANK clients. So some very strong momentum there. When you get into the particular, I'll call it, more product-oriented sets, we've seen some really great traction on the leasing product. And so you'll recall, the leasing product was a legacy IBERIABANK product and introduced to the First Horizon customers. I want to say, we've probably originated more than 50 individual leasing transactions for First Horizon collect. So again, the volume is there, and it's growing quickly. So very positive, from that perspective. And then, if you cut across and talk about fees and other -- and some things that, kind of, make up all the little ancillary things, that take a little bit of time to build. The wealth platform continues to see great growth. And I think the combined platform is deeper, broader and bigger, which is certainly a positive. We have recognized some international fees. Historically, we did a, kind of a from an IBERIABANK perspective we used some white-label products that basically, gave most of the profitability away to some other banks provided that we're able to capture that today. So we're seeing a lot of the revenue synergy side. I think, it's going to be the, I'll call it, the secret story to the success of the merger, when we look back at it, 2 years from now, about how important, and how much, I guess, breadth of the larger bank products that we've got. Relative to where we kind of position and pivot and how we try to compete, given the larger balance sheet, we really look at our position today as somewhat unique. And I recognize all banks, kind of, come pick their size and try to say whatever it is and make it fit. But from our perspective, relative to our associates and what we can deliver to our clients, right, we really do have a product set that's fairly deep and broad, right? We can compete largely with almost any bank in the United States from, I'll call it, top to bottom, in terms of product offering. But we still maintain, really, that market-centric approach, which kind of gives us a little bit of a unique dynamic, relative to some of the larger banks, right? So we like to call it, we're going to outbid the smalls and we're going to, I'll call it, outsmall the bigs, and we're going to do it with a personal touch. And we think that's really the value proposition for us, as we move forward.

Got it. And I guess, maybe to move from the personal touch to some of the technology-related stuff, like you spent a lot of time, obviously, in the COO's seat, meeting fintechs, tech vendors, et cetera. Give us a sense of when we come to next Feb or March, the baseline for where the bank will be, from a digital infrastructure standpoint. And I guess, maybe you gave us, in terms of what else needs to be done, in order to get First Horizon to being truly a digital-first bank?

Yes. So what I'll tell you is technology-wise, we'll be in a fairly good position, relative to peers, once we cross the conversion, right? And so a lot of our -- and I'd like to, kind of, break things down. We've got the piece of the technology that runs the company, and I'll call it in the background that clients can't see, and then we've got the client-facing side of the technology. And most of the client-technology stuff is actually being refreshed and is going to be, I'll call it, state of the art or new, right? So our treasury management platform is going through a significant upgrade. We've got a pilot of our current version running today. So we've got a handful of clients that are in the pilot. It's been active for 70 days. The benefit of having a pilot with 70, kind of, robust clients in it is we get to do a lot of work before we put all of the IBERIABANK clients on it. Feedback has been tremendous and positive. But again, state-of-the-art, got all the cool things that all the customers are looking for, from API integration, widgets, the ability to customize and make it work the way you want. It's got features, from the ability to, kind of, build for a small client, but let them [expand] their product set into a very robust, rich, Fortune 500 type treasury management product set. And then certainly, as real-time payments come around the curve, right, their ability to integrate that directly into it. So when we look at that, that's kind of the core technology that we see from our commercial customers. We're right, where we want to be, and I'll say we're right up at the top of the heap on that. Relative to our digital or mobile offering, we're going through numerous [reps]. I want to say that in my short time at the bank we've probably done 5 or 6 upgrades to that platform. And so we continue to invest to make sure that we've got the right technology, and we continue to invest there. So I can see out on the road map, there's at least another 2 or 3 that are already scheduled. So our commitment is to continue to invest in the technology that makes a difference, from a client perspective. And so you'll hear -- you'll continue to hear us talk about more treasury management investment, more digital investment, not because we're necessarily behind the curve, but we want to make sure that we're, kind of, at the front, and we need to be and we want to be where our clients need us to be. If you step a little bit back into the, I'll call it, the backbone of the bank, obviously, we've gone through a lot of work to upgrade all of our mainframes and our server, our flex pods, and our phone technology has all been upgraded. And so we're in a really good spot for that. We are implementing, kind of, a new version of Encino and some banker sales performance type tools inside the bank as well. And so I look at it and say, I think, we're going to be really, really good, in terms of where we are, from a technology positioning, meaning that not a lot of deferred catch-up work. There's always some elements to that, and we'll always be working on that, unfortunately, just because it's the nature of having so many different systems. But I think, for the core things that are really important to drive the business, we feel pretty good about where we are.

Got it. And the back-end stuff, as you think about, sort of, upgrading those, and I'm assuming that's a multiyear process, is it about sticking with the same vendors and they have the offering? Or could that also entail moving to new vendors or new fintechs, who have new product offerings?

Yes. So I think, it depends, right? Even I think, it depends on what we're really talking about. If we're really talking about the big legacy core systems, right, the Hogan system, base UBS, right, we're probably not really close, in terms of being able to swap those out to something else. And the reason I say that is, if you look at what's, kind of, out there to swap to, there just hasn't -- those new systems haven't been hardened enough with meaningful clients on them to be able to say, "we can move to this". However, right, we were very proactive in moving our virtual bank on to, I'll call it, next-generation core in the cloud, so that we can analyze and evaluate for ourselves what's the capacity and the ability of the technology to really support that migration as it occurs, right? So we recognize that the need to evolve and change is a constant. And so we've already, proactively, put some things in place to help us, kind of, learn along the way, but not learn from like, "hey, we've talked to people, who've done it". We're doing it ourselves. And so we'll be able to evaluate as we move through time, where we think that technology is and what can it really do. So hopefully, within a couple of years, we'll be able to tell you that, "hey, we think this technology that's out there, really can be the game changer and we can move on to that". But we're not quite there, from those old, legacy, big system yet. So -- but I do think, we're positioning ourselves really well to be able to deal with that, when we get to that point. Relative to some of the other systems that we run, we're constantly, kind of, reviewing the ability to integrate and partner with fintechs to improve our overall efficiency or deliver a unique client experience, where it makes sense and fits for our business model. And so we're dealing with some fintechs on payments I'll call it, in the risk world, we're working with some payments I mean, with some [valids] and fintechs, in particular. And then we're looking at some fintechs, even within the blockchain space, in terms of what possibly they could do for us. So haven't really partnered up there yet, but we're actively looking at what we can do.

And maybe just take a step back, Anthony. So you spent a fair amount of time talking, looking at fintechs. As you think about, a bank your size, your business mix, what are areas of, like the biggest hit that you see from fintechs, in terms of revenue disruption, for First Horizon. Is it going to be on the treasury management B2B payment side? Is it going to be on certain lending areas? Like how do you process that internally, when you, Brian, the rest of the leadership sits down and looks at it?

Look, I think, the biggest threat right now, for banks our size and probably a little bit smaller, probably, kind of, resides within the payment space, overall, right? And so the ability of, I'll call, [Technical Difficulty] system and all that stuff gives us all a lot of nightmares, when we think about it. However, even against that backdrop, right, because the threats out there, right, you see a lot of good, interesting things that are on the table, right? We'll have FedNow kind of products next year, right? There's a lot of talk around stable coins and what might happen with that. So I would say, the greatest thing that's -- and it's not so much necessarily, a threat. It's an unknown. But I would say the greatest unknown, which could be a threat, depending on how it, kind of, evolves but could also be an opportunity for people that get ahead of it and are, kind of, thinking about it the right way, I think, is really geared towards the payment space. The other thing I'll tell you, is just is pretty -- is the other thing that probably, from a First Horizon perspective, probably has to do with more active engagement on how we grow, kind of, millennials as clients, right? So this is a unique thing that all banks have. But how do we get more activity and more growth within a younger client base, something that, over the next couple of years, is going to be really important to us as well.

Got it. And I guess, just shifting gears to capital. So you announced -- you talked about the $500 million in additional buyback authorization, clearly tells you that the Board thinks that the stock is attractive, I don't disagree. I'm just going through that. As we think about, as you come out of this acquisition, we've seen a lot of the regional banks engage in a ton of like non-bank M&A. Just give us your perspective as you come through that 12 months, fast forward, are there interesting things, where you can pick up capabilities in the non-bank world that you would look to do, which maybe you're not doing today because you're busy with the integration?

I don't really think so, Ebrahim. I mean, so I'm always careful to say "never say never" on anything, but I'll tell you that not only M&A is really not a big focus for us, right, in the near term. relative to products and offerings. I think we'll continue to look, if there's something that might make sense, that's complementary. But I think we feel really good about what we've got and our position, really, to drive value for the next couple of years, just based on the backbone and the frame of what we've got, right? We love the market plan, right? We have the ability to recruit really, high top-notch talent, which we know is the key to driving success over the coming years, right? Our balance sheet is positioned really, really well, particularly if we think rates are going to be rising. So I think for us, it's more about execution as opposed to let's go out and keep bolting things on and -- so we know that from an investor standpoint, that we need to put up some good numbers, and we need to execute. So that primarily, is where our focus is, right now.

Got it. And while you were speaking, we received one question from an investor, who's -- so I'll let you -- I'll read this. But can you talk about your commitment to sustainable lending, both in terms of growth area like green energy and then some of the sectors where, maybe longer term, the outlook isn't that great, which I assume, ties into energy lending and fossil fuels?

Yes. Look, so we've got an ESG-led team on the bank, right? So that's led by Mary Lake. And certainly, the Board is very active, in terms of thinking through long-term plan for that. We recognize that the whole ESG space is very important, from an investor standpoint. And we have done certain types of lending, particularly around solar and wind, within our leasing business, and we look for opportunities to do more of that, where we can. And so although our plan is still evolving a little bit, I would say that we're very cognizant and conscious of the importance and what it means to, I'll call it, our commitment to make sure that we're, as a company, doing the right things from an ESG perspective. So -- it's still a little bit early, but I would say the company is very active with a dedicated team, Board engagement, I'll call it, consultants and advisers to the boards helping make sure that we get it right along the way. So it's early but we are making some progress. Relative to specific lending, like I said, we've done some solar, some wind lending, et cetera, to make sure that we're going to plan, where we can play.

Got it. And maybe this is an odd question to follow up with, but with oil at $80 a barrel, like energy lending, like -- is there more demand? we've heard other banks, who have presence in the energy markets, talk about seeing potential for increased energy lending. Just give us a perspective on that.

Look, we, as a company, decided that we were going to take our energy lending down from -- remember, I think, we got as high as 8%. At one point, we were at 5%. Now, we're kind of sub 3-ish. I think, when you look at energy, it's a very volatile business. It's a business that's going to go through a lot of, I'll call it, change, relative to the prior conversation, we just had, on ESG. So what I'd tell you is, our bank will be in the energy business. As much as we all would love to see everything could work on electrical or, I'll call it, non-fossil fuel-based energy, it's not the reality for the next couple of years. So it is a viable industry that's deeply embedded within our footprint. And so I don't think it's a business that you'll ever see get large, relative to our particular outstandings within the loan book. And so I would say, the current level, maybe slightly higher, maybe slightly lower, feels about right? in terms of our thought process, relative to that particular space.

Got it. Got it. And I guess, just moving. So interesting for someone to be, sort of, going through this large merger integration while we had the pandemic, which has, kind of, impacted how all of us work, in terms of work from home, hybrid work. Have there been opportunities that have come up as you've gone through this, over the last 18 months, which either on the cost side or I'm not sure if there are any in the revenue side? Just talk to us about how the pandemic has influenced, how you're thinking about running the bank or strategy-wise.

Look, I think, a couple of things stood out clearly, right? We saw an acceleration of, kind of, digital transactions. So just look at year-over-year [Audio Gap] We're closing 64 of those as part of the merger. We've got a little bit more trailing into next year. So what I would say is that the big thing that's really come out from that, is really the shift in customer behavior, Ebrahim. So those shifts create some opportunities, probably longer term, it means less physical infrastructure, probably more digital needs, I would say, would be the big thing that stands out as, kind of the primary thing. The second thing is because the foot traffic in our branches continues to evolve. It means, we have the ability to really think through the evolution of our branches, in terms of as opposed to being a reactive servicing type model being proactive, in terms of driving business and, kind of, working with [Alco] whether it's the neighborhoods around the branches or people coming into the branches more, from a proactive sales perspective. So I think it's, I'll call it, it's the new normal, but I think we feel pretty good about the opportunities that it presents.

Got it. There is one more question. Any update on the CFO search. I think, Brian talked about, maybe finalizing that before the end of the year? Anything to share?

I think that we feel really good. And I will tell you that I don't expect to be doing the investor conference call in the first quarter. So I'm limited to what I can say other than I feel really good that I will not be doing the conference call in the first quarter.

You're excited. I'm sorry to hear that, but the smile on your face, I guess, really [relieves that end]. Just last question, we're running out of time. As you think about the next 3 years for the First Horizon franchise, I think, there's just so much noise that's paid out. Can you remind us in terms of as we think about what are the key 1 or 2 strengths that investors should be focused on? Is it the scale? Is it the technology? Is it the geography, which is going to drive superior growth and hopefully, superior returns?

Look, I think that the things that make First Horizon different from other banks, one, the geography we operate in gives us the ability, even if we only -- I'm going to say, even if we only which we intend to do better than this, but even if we only get our share of the growth in the markets, that share will grow faster than, generally, the rest of the country, right? So not only do I expect to get our share, but we're going to get more than that. So very excited about the footprint that we operate within and what we think, is going to be available to us. As I mentioned, really, the deeper, broader product set gives us the ability to really outcompete some of the smaller banks that we've traditionally competed with, which I'm very excited about. And at the same time, I think we can move upstream and use some of our balance sheet capacity, where it makes sense to make a difference. So those two things are very positive. Obviously, the revenue synergies from the 2 companies merging together, are starting to emerge. And I think, that's going to be the secret story, relative to the merger, when we look back at it, a couple of years. So I would say, those three things, outside of interest rates. So I think, interest rates will be the gravy on top, when we move [Technical Difficulty] asset sensitivity, but the core fundamentals that will drive the bank, are in place. It turns in for us. Once we pass the conversion, it's all about execution and delivering on what we've got and what's available to us today.

Got it. With that, we are out of time. So Anthony, thank you so much for taking the time. Ellen, thanks for joining. Have a great day.

Thank you.