First Horizon Corporation · NYSE:FHN
First Horizon — Q1 2022 Earnings Presentation
27 slides from First Horizon's earnings presentation, Apr 19, 2022
Slide 1: First Quarter 2022 Earnings
First Quarter 2022 Earnings April 19, 2022
Slide 2: Disclaimers
Disclaimers Non-GAAP Information Certain measures included in this document are “non-GAAP,” meaning they are not presented in accordance with generally accepted accounting principles in the U.S. and also are not codified in U.S. banking regulations currently applicable to FHN. FHN’s management belie
Slide 3: Disclaimers (cont’d)
Disclaimers (cont’d) Important Other Information In connection with the proposed transaction with TD, First Horizon has filed a preliminary proxy statement and other materials with the SEC, and intends to file additional relevant materials with the SEC, including a definitive proxy statement on Sche
Slide 4: 1Q22 GAAP financial summary
1Q22 GAAP financial summary1 Reported 1Q22 Change vs. $s in millions except per share data 1Q22 4Q21 3Q21 2Q21 1Q21 4Q21 1Q21 $/bps % $/bps % Net interest income $ 479 $ 498 $ 492 $ 497 $ 508 $ (19) (4)% $ (29) (6)% Fee income 229 247 247 285 298 (18) (7)% (69) (23)% Total revenue 707 745 738 781 80
Slide 5: Table of contents
Table of contents 1Q22 key messages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1Q22 overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 6: Well positioned to benefit given economic recovery and outlook for rates
Well positioned to benefit given economic recovery and outlook for rates Adjusted EPS1 Adjusted ROTCE1 TBV $0.38 14.7% $10.46 +1% -9% -4% Core Net Interest Income Adjusted Adjusted ex. Day Count Noninterest Income Expense -38% ~$60 million +16.5% IBKC Merger Provision Asset Sensitive Annualized Reve
Slide 7: 1Q22 underlying momentum muted by countercyclical impacts & seasonality
1Q22 underlying momentum muted by countercyclical impacts & seasonality Adjusted EPS of $0.38 and PPNR of $249 million1 • Adjusted revenue of $704 million decreased 6% QoQ largely reflecting the impact of higher long-term rates on fixed income and mortgage as well as seasonality – NII down $20 milli
Slide 8: 1Q22 notable items
1Q22 notable items1 GAAP results reduced by $24 million after-tax, or $0.04 per share, of notable items ($s in millions, except per share data) Notable Items Pre-tax Notable Items 1Q22 IBKC merger-related notable items Noninterest expense: • IBKC merger-related expense of $28 million Total nonintere
Slide 9: 1Q22 adjusted financial highlights
1Q22 adjusted financial highlights1 PPNR results largely reflect impact of higher long-term rates and seasonality 1Q22 vs. 4Q21 Highlights 1Q22 Change vs. • Adjusted EPS of $0.38 vs. $0.48; includes a $0.03 per share reduction tied to lower provision credit $s in millions except per share data 1Q22
Slide 10: NII trends reflect $7 million impact tied to day count
NII trends reflect $7 million impact tied to day count1 Results reflect continued securities portfolio investments and 4% C&I loan growth ex. PPP and LMC ($s in millions) FTE NII and NIM Trends 1Q22 vs. 4Q21 Highlights $511 $500 $495 $502 $482 • FTE NII down 4% and NIM down 5 bps driven by a $464 $4
Slide 11: Adjusted fee income reflects impact of higher long-term rates and seasonality
Adjusted fee income reflects impact of higher long-term rates and seasonality1 Results largely reflect declines in fixed income, mortgage and NSF fees 1Q22 vs. 4Q21 Highlights 1Q22 Change vs. • Adjusted fee income decreased $23 million, $s in millions 1Q22 4Q21 3Q21 2Q21 1Q21 4Q21 1Q21 or 9%, driven
Slide 12: Adjusted expense down 4% with lower other noninterest expense/outside services
Adjusted expense down 4% with lower other noninterest expense/outside services Results reflect impact tied to change in timing of long-term and stock compensation costs 1Q22 vs. 4Q21 Highlights • Adjusted expense of $455 million decreased $19 million driven by lower other noninterest 1Q22 Change vs.
Slide 13: Loans relatively stable before the impact of PPP runoff
Loans relatively stable before the impact of PPP runoff1 C&I ex PPP & LMC up 4% QoQ 1Q22 vs. 4Q21 Highlights Loan trends Period-end Average • Loans of $54.1 billion down $599 million driven by a $630 million decrease in PPP loans $58.6B $56.8B $55.5B 9% $54.9B $55.0B $54.7B $54.1B 9% 7% 8% 8% 9% 7%
Slide 14: Relatively stable deposit and funding costs
Relatively stable deposit and funding costs1 Interest-bearing deposit costs relatively stable with improved period-end deposit mix Interest-bearing liabilities & DDA trends 1Q22 vs. 4Q21 Highlights Period-end Average $77.5B $79.0B $77.9B $77.6B $78.4B $79.0B $78.4B • Average deposits of $74.2 billio
Slide 15: Strong credit quality performance
Strong credit quality performance Results reflect decreased COVID-19 concerns and impact of slower growth economic forecast & inflationary pressures ($s in millions) 1Q22 vs. 4Q21 Highlights Provision, credit losses, and net charge-offs • Net charge-offs increased to 7 bps from unusually low levels
Slide 16: Strong capital position
Strong capital position1 Capital levels 1Q22 vs. 4Q21 Highlights 13.2% • TBVPS of $10.46 decreased 5% QoQ driven by a $0.76 12.8% 13.1% 12.6% 12.3% reduction tied to a MTM valuation adjustment on the 11.8% 11.4% 11.2% securities portfolio 11.0% 11.0% 10.3% 10.1% 9.9% 10.0% • CET1 ratio remained stro
Slide 17: IBKC merger integration and TD acquisition update
IBKC merger integration and TD acquisition update IBKC Merger Highlights Targeting annualized cost • Successfully completed systems and signage conversion saves of ~$200 million – Bank servicing channels opened to customers ahead of by 4Q22 schedule on conversion weekend – No significant increase in
Slide 18: Focused on driving enhanced value
Focused on driving enhanced value • Focused on driving enhanced value for our associates, clients, communities and shareholders as we plan to join forces with TD • Deliver further benefits of diversified business model through revenue synergies and loan growth – Leverage benefits of MOE integrated s
Slide 19: APPENDIX
APPENDIX 19
Slide 20: NII accretion schedule & NII/NIM reconciliation to GAAP financials
NII accretion schedule & NII/NIM reconciliation to GAAP financials Estimated IBKC Securities Premium Amortization1 Estimated IBKC Loan Accretion Estimated Loan Accretion - Other Acquisitions $s in millions $s in millions $s in millions 2Q22 $ (9) 2Q22 $ 12 2Q22 $ 4 3Q22-4Q22 $ (16) 3Q22-4Q22 $ 21 3Q
Slide 21: Notable Items
Notable Items ($s in millions except per share data) Favorable / (Unfavorable) (In millions, except per share data) 1Q22 4Q21 3Q21 2Q21 1Q21 Noninterest income: Purchase accounting gain (other noninterest income)1 $ — $ — $ — $ 2 $ (1) Retirement of legacy IBKC TruPS (other noninterest income) — 3 2
Slide 22: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. Adjusted FHN historical quarterly income statements 1Q22 4Q21 3Q21 2Q21
Slide 23: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. ($s in millions, except per share data) 1Q22 4Q21 3Q21 2Q21 1Q21 Tangibl
Slide 24: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. ($s in millions, except per share data) 1Q22 4Q21 3Q21 2Q21 1Q21 Adjuste
Slide 25: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. $ in millions except per share data) 1Q22 4Q21 3Q21 2Q21 1Q21 Adjusted N
Slide 26: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. $ in millions except per share data) 1Q22 Net income available to common
Slide 27: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. Period-end Average $s in millions 1Q22 4Q21 1Q22 vs 4Q21 1Q22 4Q21 1Q22