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2Q EPS Up as First Horizon Creates Strong Momentum

MEMPHIS, Tenn., July 18, 2014 (GLOBE NEWSWIRE) -- Strong performance highlighted by growth in loans and net interest income and the recovery of certain litigation costs yielded First Horizon National Corp. (NYSE:FHN) earnings per share of $0.32 for the second quarter, compared to EPS of $0.19 last quarter.

Total loans were up 4 percent from first to second quarter in First Horizon's regional banking business, First Tennessee, which has the largest market share in Tennessee. The bank saw double-digit year-over-year loan growth in asset-based lending, commercial real estate and its Mid-Atlantic region that includes the Carolinas, Virginia and North Florida. Loan growth was up 8 percent year-over-year in Middle Tennessee, and the banking team also started to make loan commitments in the bank's new markets of Houston, Charleston, S.C., and Jacksonville, Fla. The capital markets segment had a $47 million pre-tax litigation expense recovery in the quarter.

First Horizon continues to reduce the drag of the mortgage business the company sold in 2008, with non-strategic loans now making up less than 19 percent of the loan portfolio. In April the company settled with FHFA, and non-strategic average loans were reduced 17 percent compared to second quarter 2013.

"As we celebrate our 150th anniversary, we are focused on building First Tennessee and FTN Financial while improving our customer focus and the economic profitability in every area of the company," said Bryan Jordan, First Horizon's chairman and CEO. "It's gratifying to see the success of our 4,200 employees serving customers paying off with continued profitability that benefits our shareholders and our communities."

Financial highlights

  • Net income available to common shareholders was $76.8 million, or $0.32 per diluted share, in the second quarter, compared to $0.19 per diluted share in the first quarter.
  • In the regional bank, First Tennessee's pre-tax income increased to $72.9 million in the second quarter, compared to $56.0 million in the first quarter.
  • Fixed income revenue was $40.5 million in the second quarter compared to $49.6 million in the first quarter, a reflection of market conditions that led to lower average daily revenues at FTN Financial, which remains a significant contributor of fee income and an important part of First Horizon's business mix.
  • Asset quality remained strong. The provision for loan losses declined to $5.0 million in the second quarter from $10.0 million in the first quarter.
  • In the second quarter First Horizon reached settlement agreements with insurance companies to recover $47.1 million of expenses related to the Sentinel litigation, which First Horizon settled in 2011.
  • A fair value adjustment primarily related to the non-performing portion of the held-for-sale mortgage banking loan portfolio favorably impacted non-strategic earnings by $8.2 million for the second quarter.

FHN CONSOLIDATED SUMMARY RESULTS
2Q14 Changes vs.
(Dollars in thousands, except per share data) 2Q14 1Q14 2Q13 1Q14 2Q13
Income Statement Highlights
Net interest income $ 156,768 $ 152,359 $ 160,019 3% (2)%
Noninterest income 128,824 140,073 142,983 (8)% (10)%
Securities gains/(losses), net (1,923) 5,657 (351) NM NM
Total revenue 283,669 298,089 302,651 (5)% (6)%
Noninterest expense 165,332 220,214 227,408 (25)% (27)%
Provision for loan losses 5,000 10,000 15,000 (50)% (67)%
Income/(loss) before income taxes 113,337 67,875 60,243 67% 88%
Provision/(benefit) for income taxes 32,157 18,645 15,008 72% NM
Income/(loss) from continuing operations 81,180 49,230 45,235 65% 79%
Income/(loss) from discontinued operations, net of tax -- -- 1 NM NM
Net income/(loss) 81,180 49,230 45,236 65% 79%
Net income attributable to noncontrolling interest 2,859 2,813 2,843 2% 1%
Net income/(loss) attributable to controlling interest 78,321 46,417 42,393 69% 85 %
Preferred stock dividends 1,550 1,550 1,550 * *
Net income/(loss) available to common shareholders $ 76,771 $ 44,867 $ 40,843 71% 88%
Common Stock Data
Diluted EPS $ 0.32 $ 0.19 $ 0.17 68% 88%
Diluted shares (thousands) 237,250 237,401 240,891 * (2)%
Period-end shares outstanding (thousands) 237,147 236,586 240,555 * (1)%
Balance Sheet Highlights (Period-End)
Total loans, net of unearned income $ 15,795,709 $ 15,119,461 $ 16,197,952 4% (2)%
Total deposits 16,157,487 16,672,743 17,011,884 (3)% (5)%
Total assets 24,222,750 23,941,989 24,852,800 1% (3)%
Total liabilities 21,596,599 21,397,852 22,306,392 1% (3)%
Total equity 2,626,151 2,544,137 2,546,408 3% 3%
Asset Quality Highlights
Allowance for loan losses $ 243,628 $ 247,246 $ 261,934 (1)% (7)%
Allowance / period-end loans 1.54% 1.64% 1.62%
Net charge-offs $ 8,618 $ 16,563 $ 18,284 (48)% (53)%
Net charge-offs (annualized) / average loans 0.22% 0.45% 0.46%
Non-performing assets (NPA) $ 339,581 $ 345,520 $ 432,552 (2)% (21)%
NPA % (a) 1.71% 1.87% 2.25%
Key Ratios & Other
Return on average assets (annualized) (b) 1.38% 0.83% 0.74%
Return on average common equity (annualized) (c) 14.14% 8.48% 7.46%
Net interest margin (d) 2.97% 2.88% 2.96%
Efficiency ratio (e) 57.89% 75.30% 75.05%
Tier 1 ratio (f) 14.20% 14.26% 13.28%
Market capitalization (millions) $ 2,812.6 $ 2,919.5 $ 2,694.2
Certain previously reported amounts have been reclassified to agree with current presentation.
NM - Not meaningful
* Amount is less than one percent.
(a) NPAs related to the loan portfolio over period-end loans plus foreclosed real estate and other assets.
(b) Calculated using net income.
(c) Calculated using net income available to common shareholders.
(d) Net interest margin is computed using net interest income adjusted to a fully taxable equivalent ("FTE") basis assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.
(e) Noninterest expense divided by total revenue excluding securities gains/(losses).
(f) Current quarter is an estimate.

Conference call

Management will hold a conference call at 8:30 a.m. Central Time today to review earnings and performance trends. There will also be a live webcast accompanied by the slide presentation available in the investor relations section of www.firsthorizon.com. The call and slide presentation may involve forward-looking information, including guidance.

Participants can call toll-free starting at 8:15 a.m. by dialing 888-317-6016. The number for international participants is 412-317-6016. Participants can also listen to the live audio webcast with the accompanying slide presentation through the website. A replay will be available from noon today until 8:00 a.m. Aug. 4. To listen to the replay, dial 877-344-7529 or 412-317-0088. The access code is 10049015. The event also will be archived and available by midnight Central Time tomorrow on the website.

Other information

This press release contains forward-looking statements involving significant risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking information. Those factors include general economic and financial market conditions, including expectations of and actual timing and amount of interest rate movements including the slope of the yield curve, competition, ability to execute business plans, geopolitical developments, recent and future legislative and regulatory developments, inflation or deflation, market (particularly real estate market) and monetary fluctuations, natural disasters, customer, investor and regulatory responses to these conditions and items already mentioned in this press release, as well as critical accounting estimates and other factors described in First Horizon's annual report on Form 10-K and other recent filings with the SEC. First Horizon disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements included herein or therein to reflect future events or developments.

About First Horizon

The 4,200 employees of First Horizon National Corp. (NYSE:FHN) provide financial services through more than 170 First Tennessee Bank locations in and around Tennessee and 26 FTN Financial offices in the U.S. and abroad. The company was founded during the Civil War in 1864 and has the 14th oldest national bank charter in the country. First Tennessee has the leading market share in Tennessee, and FTN Financial is a capital markets industry leader in fixed income sales, trading and strategies for institutional clients in the U.S. and abroad. First Horizon has been recognized as one of the nation's best employers by Working Mother and American Banker magazines. More information is available at www.FirstHorizon.com.

FHN-G

CONTACT: First Horizon Investor Relations, Aarti Bowman, (901) 523-4017 First Horizon Media Relations, Jack Bradley, (901) 523-4813

Source:First Horizon National Corporation

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