First Horizon was founded in 1864. Since then, we’ve grown into one of the largest and most respected banks in the Southeast. Today’s COVID-19 situation reminds us of the challenging times we’ve seen throughout our long history. When Memphis was hit by the yellow fever epidemic of 1878, we stayed open largely due to one bookkeeper named Charles Q. Harris. He was literally the last man standing, and the bank never closed. We’ve seen wars, depressions and recessions. We are resilient enough to weather this storm and have what it takes to continue to serve you as we always have.
Our history has taught us to be strong in two key areas:
First Horizon has a balanced mix of consumer and commercial deposits, with 91% of total deposits classified as core deposits. While cash ebbs and flows daily, in March we have seen deposits grow as customers seek financial safety. These net deposit inflows increase our cash levels and reduce our need for borrowing. Also, if needed, we have access to significant additional liquidity from the Federal Reserve and the Federal Home Loan Bank.
On the capital side, First Horizon conducts annual stress tests to ensure the company is able to maintain sufficient financial strength to meet customer needs through an adverse financial cycle.
Our 2019 stress test indicated that First Horizon is able to maintain more than adequate capital levels in a period of extreme economic stress. The stress test assumed an economic scenario where unemployment is high, the economy experiences a rapid recession, and asset prices fall quickly and severely.
We also are encouraged that our strong credit underwriting and countercyclical businesses, such as our FHN Financial Fixed Income business, help to maintain a solid capital foundation through volatile financial conditions.
Our liquidity position (including borrowing arrangements), and our capital position (including stress test results), are crucial parts of First Horizon’s cash management and capital planning. These positions and plans are regularly reviewed through the most senior levels of the organization, including executive management and the Board of Directors.