First Horizon Corporation · NYSE:FHN
First Horizon — Q4 2022 Earnings Presentation
24 slides from First Horizon's earnings presentation, Jan 18, 2023
Slide 1: Fourth Quarter 2022 Earnings
Fourth Quarter 2022 Earnings January 18, 2023
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: 4Q22 GAAP financial summary
4Q22 GAAP financial summary1 Reported 4Q22 Change vs. Reported 2022 vs. 2021 $s in millions except per share data 4Q22 3Q22 2Q22 1Q22 4Q21 3Q22 4Q21 2022 2021 $/bps % $/bps % $/bps % Net interest income $ 709 $ 662 $ 542 $ 479 $ 498 $ 47 7% $ 211 42 % $ 2,392 $ 1,994 $398 20 % Fee income 174 213 201
Slide 4: Table of contents
Table of contents 4Q22 key messages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4Q22 overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 5: Well positioned to benefit given outlook for rates
Well positioned to benefit given outlook for rates1 Adjusted EPS Adjusted ROTCE TBV $0.51 21.7% $10.23 +8% -4% +5% Core Adjusted Adjusted Net Interest Income Noninterest Income PPNR +3% ~$94 million +1.8% IBKC Merger Adjusted Asset Sensitive to Annualized Revenue Expense +25 bp Shock Scenario Synerg
Slide 6: 4Q22 robust PPNR driven by strength in NII
4Q22 robust PPNR driven by strength in NII Adjusted EPS of $0.51 and PPNR of $424 million1 • Adjusted revenue of $885 million increased $38 million, or 4%, QoQ as strength in NII was partially offset by lower noninterest income largely given macroeconomic impacts – NII up $46 million QoQ reflecting
Slide 7: 4Q22 notable items
4Q22 notable items1 GAAP results reduced by $34 million after-tax, or $0.06 per share, of notable items ($s in millions, except per share data) Notable Items Pre-tax Notable Items 4Q22 IBKC merger-related notable items Noninterest expense: • IBKC merger-related expense of $4 million Total noninteres
Slide 8: 4Q22 adjusted financial highlights
4Q22 adjusted financial highlights1 PPNR up 5% driven by strength in NII 4Q22 vs. 3Q22 Highlights 4Q22 Change vs. • Adjusted EPS of $0.51 vs. $0.44 $s in millions except per – Adjusted ROTCE of 21.7% and TBV per share share data 4Q22 3Q22 4Q21 3Q22 4Q21 of $10.23 $/bps % $/bps % Net Interest Income
Slide 9: FY22 adjusted financial highlights
FY22 adjusted financial highlights1 PPNR up 11% driven by strength in NII and expense discipline FY22 vs. FY21 Highlights FY22 Change vs. • Adjusted EPS of $1.68 vs. $2.07 $s in millions except per – Adjusted ROTCE of 17.0% and TBV per share share data FY22 FY21 FY21 of $10.23 $/bps % Net Interest I
Slide 10: NII trends reflect the benefit of rising rates and loan growth
NII trends reflect the benefit of rising rates and loan growth 1 Results reflect 2% loan growth and 4% C&I loan growth ex. PPP and LMC ($s in millions) FTE NII and NIM Trends 4Q22 vs. 3Q22 Highlights $712 $666 $711 $545 $659 • FTE NII up $46 million, or 7%, and NIM up 41 bps $502 $482 despite a $6 m
Slide 11: Adjusted fee income trends impacted by higher rates
Adjusted fee income trends impacted by higher rates1 Results driven by declines in fixed income & mortgage banking 4Q22 vs. 3Q22 Highlights 4Q22 Change vs. • Adjusted fee income down $8 million, or 4%, $s in millions 4Q22 3Q22 2Q22 1Q22 4Q21 3Q22 4Q21 driven by a reduction in fixed income and $/bps
Slide 12: Adjusted expense up 3% driven by increases in other noninterest expense
Adjusted expense up 3% driven by increases in other noninterest expense1 Results largely reflect lower salaries and revenue-based incentives and commissions 4Q22 vs. 3Q22 Highlights 4Q22 Change vs. • Adjusted expense of $458 million increased $s in millions 4Q22 3Q22 2Q22 1Q22 4Q21 3Q22 4Q21 $14 mil
Slide 13: Total loan growth of 3% ex PPP & LMC
Total loan growth of 3% ex PPP & LMC1 C&I ex PPP & LMC up 4% QoQ Loan trends Period-end Average 4Q22 vs. 3Q22 Highlights • Loans of $57.6 billion up $1.0 billion driven by a 1% $57.4B $58.1B $56.5B $57.6B $54.9B 4% $54.1B $55.6B 4% increase in commercial and a 3% in consumer 5% —% —% 6% 5% —% 8% 1%
Slide 14: Deposit costs reflect impact of rising rates and increased competition
Deposit costs reflect impact of rising rates and increased competition1 Interest-bearing deposit betas of 48% in the quarter Interest-bearing liabilities & DDA trends 4Q22 vs. 3Q22 Highlights Period-end Average $79.0B $78.4B • Average deposits of $64.9 billion decreased $75.8B $3.3 billion, or 5%, d
Slide 15: Continued strong credit quality
Continued strong credit quality Reserve build reflects the impact of loan growth and revised macroeconomic outlook ($s in millions) 4Q22 vs. 3Q22 Highlights Provision, credit losses, and net charge-offs • Net charge-offs of $26 million increased $14 million $60 • NPL ratio of 54 bps increased 4 bps
Slide 16: Strong capital position
Strong capital position1 Capital levels 4Q22 vs. 3Q22 Highlights • TBVPS of $10.23 increased 5% driven by a $0.57 increase tied to adjusted NIAC and a $0.15 increase tied to MTM valuation 12.3% 13.2% 13.0% 13.1% 13.3% adjustments on AFS securities and cash flow hedges 11.7% 11.9% • CET1 ratio remain
Slide 17: 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 18: Appendix
APPENDIX 18
Slide 19: NII/NIM reconciliation to GAAP financials
NII/NIM reconciliation to GAAP financials 4Q22 Reported to Core Reconciliation 2Q22 Reported to Core Reconciliation 4Q21 Reported to Core Reconciliation $s in millions NII NIM $s in millions NII NIM $s in millions NII NIM 4Q22 Reported (FTE) $ 712 3.89 % 2Q22 Reported (FTE) $ 545 2.74 % 4Q21 Reporte
Slide 20: Notable Items
Notable Items ($s in millions except per share data) (In millions) 4Q22 3Q22 2Q22 1Q22 4Q21 2022 2021 Summary of Notable Items: Purchase accounting gain* $ — $ — $ — $ — $ — $ — $ (1) Gain/(loss) on TRUPS redemption (other noninterest income) — — — — (3) — (26) IBKC Branch sale gain (other nonintere
Slide 21: 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. CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in
Slide 22: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in
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. CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited (In mi
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. Period-end Average ($s in millions) 4Q22 3Q22 4Q22 vs. 3Q22 4Q22 3Q22 4Q