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March Toward Long-Term Profitability Continues as First Horizon Enters 150th Year

First Horizon Logo

MEMPHIS, Tenn., Jan. 17, 2014 (GLOBE NEWSWIRE) -- In 2013 First Horizon National Corp. (NYSE:FHN) continued making progress toward long-term profitability in its regional banking business through First Tennessee and its fixed income business through FTN Financial. The company also continued to unwind from the mortgage business it sold in 2008. 2013 net income available to common shareholders was $24 million, and earnings per common share were $0.10. In the fourth quarter, consolidated net income available to common shareholders was $49 million or $0.21 per share.

"In 2013 our bankers and FTN Financial team continued to build on our promise to be the best at serving our customers, one opportunity at a time. We earned the number one market share in Tennessee, grew loans in our regional bank and continued to wind down our non-strategic businesses," said Bryan Jordan, First Horizon's chairman and CEO. "As we prepare to celebrate our company's 150th anniversary this year we're focused on building our business for generations to come, improving asset quality, controlling costs and managing our business to create long-term value for our shareholders."

Financial highlights

  • In the regional bank average loans grew 2 percent and average core deposits were up 2 percent from 2012 to 2013. Expenses declined 7 percent even as the bank continued to selectively invest in talent, products and technology.
  • The fixed income group remained an important part of First Horizon's business mix, making significant contributions to overall fee income in spite of uncertain market conditions that led to lower sales volumes.
  • Asset quality improved throughout the year, with net charge-offs down 58 percent and reserves down 8 percent from 2012 to 2013. The loan loss provision declined 29 percent year over year.
  • Capital ratios remain strong, with estimated Tier 1 capital at 14 percent at the end of 2013.

FHN CONSOLIDATED SUMMARY RESULTS
Quarterly, Unaudited
4Q13 Changes vs. Twelve months ended 2013 vs.
(Dollars in thousands, except per share data) 4Q13 3Q13 2Q13 1Q13 4Q12 3Q13 4Q12 2013 2012 2012
Income Statement Highlights
Net interest income $ 157,135 $ 158,838 $ 160,019 $ 161,382 $ 170,598 (1)% (8)% $ 637,374 $ 688,667 (7)%
Noninterest income 132,860 150,571 142,983 156,403 151,143 (12)% (12)% 582,817 670,636 (13)%
Securities gains/(losses), net 2,183 (96) (351) 24 (4,700) NM NM 1,760 693 NM
Total revenue 292,178 309,313 302,651 317,809 317,041 (6)% (8)% 1,221,951 1,359,996 (10)%
Noninterest expense 260,097 433,556 227,408 240,540 271,361 (40)% (4)% 1,161,601 1,383,701 (16)%
Provision for loan losses 15,000 10,000 15,000 15,000 15,000 50% * 55,000 78,000 (29)%
Income/(loss) before income taxes 17,081 (134,243) 60,243 62,269 30,680 NM (44)% 5,350 (101,705) NM
Provision/(benefit) for income taxes (36,555) (31,094) 15,008 17,730 (12,914) (18)% NM (34,911) (85,262) 59%
Income/(loss) from continuing operations 53,636 (103,149) 45,235 44,539 43,594 NM 23% 40,261 (16,443) NM
Income/(loss) from discontinued operations, net of tax (6) 123 1 430 (12) NM 50% 548 148 NM
Net income/(loss) 53,630 (103,026) 45,236 44,969 43,582 NM 23% 40,809 (16,295) NM
Net income attributable to noncontrolling interest 2,934 2,875 2,843 2,813 2,901 2% 1% 11,465 11,464 *
Net income/(loss) attributable to controlling interest 50,696 (105,901) 42,393 42,156 40,681 NM 25% 29,344 (27,759) NM
Preferred stock dividends 1,550 1,550 1,550 1,188 -- * NM 5,838 -- NM
Net income/(loss) available to common shareholders $ 49,146 $ (107,451) $ 40,843 $ 40,968 $ 40,681 NM 21% $ 23,506 $ (27,759) NM
Common Stock Data
Diluted EPS from continuing operations $ 0.21 $ (0.45) $ 0.17 $ 0.17 $ 0.17 NM 24% $ 0.10 $ (0.11) NM
Diluted EPS $ 0.21 $ (0.45) $ 0.17 $ 0.17 $ 0.17 NM 24% $ 0.10 $ (0.11) NM
Diluted shares (thousands) 236,753 236,895 240,891 242,799 246,132 * (4)% 239,794 248,349 (3)%
Period-end shares outstanding (thousands) 236,370 236,328 240,555 241,225 243,598 * (3)% 236,370 243,598 (3)%
Cash dividends declared per share $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.01 * NM $ 0.20 $ 0.04 NM
Balance Sheet Highlights (Period-End)
Total loans, net of unearned income (Restricted - $.1 billion) (a) $ 15,389,074 $ 15,408,556 $ 16,197,952 $ 15,889,670 $ 16,708,582 * (8)%
Total deposits 16,734,956 16,283,909 17,011,884 16,204,467 16,629,709 3% 1%
Total assets (Restricted - $.1 billion) (a) (b) 23,792,576 23,858,753 24,852,800 24,803,048 25,334,019 * (6)%
Total liabilities (Restricted - $.1 billion) (a) (b) 21,292,083 21,425,460 22,306,392 22,203,321 22,824,813 (1)% (7)%
Total equity 2,500,493 2,433,293 2,546,408 2,599,727 2,509,206 3% *
Asset Quality Highlights
Allowance for loan losses (Restricted - $4.4 million) (a) $ 253,809 $ 255,710 $ 261,934 $ 265,218 $ 276,963 (1)% (8)%
Allowance / period-end loans 1.65% 1.66% 1.62% 1.67% 1.66%
Net charge-offs $ 16,901 $ 16,224 $ 18,284 $ 26,745 $ 19,781 4% (15)%
Net charge-offs (annualized) / average loans 0.44% 0.41% 0.46% 0.67% 0.48%
Non-performing assets (NPA) (c) $ 434,988 $ 482,045 $ 506,265 $ 418,385 $ 419,369 (10)% 4%
NPA % (c) (d) 1.95% 2.19% 2.25% 1.81% 1.84%
Key Ratios & Other
Return on average assets (annualized) (e) 0.89% (1.69)% 0.74% 0.73% 0.69%
Return on average common equity (annualized) (f) 9.37% (20.39)% 7.46% 7.48% 7.20%
Net interest margin (g) (h) 2.98% 2.97% 2.96% 2.95% 3.09%
Fee income to total revenue (i) 45.81% 48.66% 47.19% 49.22% 46.98%
Efficiency ratio (j) 89.69% NM 75.05% 75.69% 84.34%
Book value per common share (k) $ 8.92 $ 8.64 $ 8.96 $ 9.16 $ 9.09
Tangible book value per common share (h) (k) $ 8.23 $ 7.95 $ 8.28 $ 8.51 $ 8.44
Adjusted tangible common equity to risk weighted assets (h) (l) 10.31% 9.69% 9.69% 9.91% 9.93%
Market capitalization (millions) $ 2,753.7 $ 2,597.2 $ 2,694.2 $ 2,576.3 $ 2,414.1
Full time equivalent employees 4,309 4,338 4,296 4,381 4,507
NM - Not meaningful
* Amount is less than one percent.
Certain previously reported amounts have been reclassified to agree with current presentation.
(a) Restricted balances parenthetically presented are as of December 31, 2013.
(b) Balances reflect the net presentation of certain capital markets receivables and payables. Prior periods have been revised for comparability.
(c) 2013 increase primarily relates to second liens placed on nonaccrual based on information received from a third-party on the performance status of non-FHN serviced first liens and acquired foreclosed real estate from the MNB acquisition.
(d) NPAs related to the loan portfolio over period-end loans plus foreclosed real estate and other assets.
(e) Calculated using net income.
(f) Calculated using net income available to common shareholders.
(g) Net interest margin is computed using net interest income adjusted to a fully taxable equivalent ("FTE") basis.
(h) Refer to the Non-GAAP to GAAP Reconciliation.
(i) Ratio excludes securities gains/(losses).
(j) Noninterest expense divided by total revenue excluding securities gains/(losses).
(k) 2Q13 decrease due to $40 million prepaid share repurchase agreement, shares were delivered in 3Q13.
(l) Current quarter is an estimate.

Certain measures in this release are non-GAAP, meaning they are not presented in accordance with generally accepted accounting principles (GAAP) in the U.S. First Horizon's management believes such measures are relevant to understanding the capital position and results of the company. The non-GAAP items presented in this release are tangible book value per common share, adjusted tangible common equity to risk-weighted assets and net interest margin computed using net interest income adjusted for FTE. These measures are reported to First Horizon's management and board of directors through various internal reports. Additionally, disclosure of the non-GAAP capital ratios provides a meaningful base for comparability to other financial institutions as demonstrated by their use by the various banking regulators in reviewing the capital adequacy of financial institutions. Non-GAAP measures are not formally defined by GAAP or codified in the federal banking regulations, and other entities may use calculation methods that differ from those used by First Horizon. The reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items can be found in this table:

NON-GAAP to GAAP Reconciliation
(Period End, Dollars in Thousands except per share data) (Unaudited) 4Q13 3Q13 2Q13 1Q13 4Q12
Tangible Common Equity (Non-GAAP)
(A) Total equity (GAAP) $ 2,500,493 $ 2,433,293 $ 2,546,408 $ 2,599,727 $ 2,509,206
Less: Noncontrolling interest (a) 295,431 295,431 295,431 295,257 295,165
Less: Preferred stock 95,624 95,624 95,624 95,624 --
(B) Total common equity 2,109,438 2,042,238 2,155,353 2,208,846 2,214,041
Less: Intangible assets (GAAP) (b) 163,931 162,695 163,623 156,014 156,942
(C) Tangible common equity (Non-GAAP) 1,945,507 1,879,543 1,991,730 2,052,832 2,057,099
Less: Unrealized gains on AFS securities, net of tax (11,241) 11,153 9,439 48,591 55,250
(D) Adjusted tangible common equity (Non-GAAP) $ 1,956,748 $ 1,868,390 $ 1,982,291 $ 2,004,241 $ 2,001,849
Period-end Shares Outstanding
(E) Period-end shares outstanding 236,370 236,328 240,555 241,225 243,598
Risk Weighted Assets
(F) Risk weighted assets (c) (d) $ 18,971,300 $ 19,275,526 $ 20,460,353 $ 20,231,850 $ 20,153,430
Ratios
(D)/(F) Adjusted tangible common equity to risk weighted assets ("TCE/RWA") (Non-GAAP) (c) 10.31% 9.69% 9.69% 9.91% 9.93%
(C)/(E) Tangible book value per common share (Non-GAAP) $ 8.23 $ 7.95 $ 8.28 $ 8.51 $ 8.44
Net interest income adjusted for impact of fully taxable equivalent ("FTE") (Non-GAAP)
Net interest income (GAAP) $ 157,135 $ 158,838 $ 160,019 $ 161,382 $ 170,598
FTE adjustment 2,044 1,894 1,913 1,787 1,842
Net interest income adjusted for impact of FTE (Non-GAAP) $ 159,179 $ 160,732 $ 161,932 $ 163,169 $ 172,440
Certain previously reported amounts have been reclassified to agree with current presentation.
(a) Included in total equity on the Consolidated Balnce Sheet.
(b) Includes goodwill and other intangible assets, net of amortization.
(c) Current quarter is an estimate.
(d) Defined by and calculated in conformity with bank regulations.

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 877-303-6618. The number for international participants is 224-357-2205. The conference ID number is 30344741. 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 11:59 p.m. Jan. 31. To listen to the replay, dial 855-859-2056 or 404-537-3406. The passcode is 30344741. The event also will be archived and available by midnight Central Time 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 4,300 employees of First Horizon National Corp. (NYSE:FHN) provide financial services through more than 170 bank locations in and around Tennessee and 21 FTN Financial Group offices in the U.S. and abroad. First Tennessee Bank has the leading market share in Tennessee and one of the highest customer retention rates of any bank in the country. 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