First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q3 2018 Earnings Presentation
21 slides from First Horizon's earnings presentation, Oct 16, 2018
Slide 1: First Horizon National Corporation Third Quarter 2018 Earnings
First Horizon National Corporation Third Quarter 2018 Earnings October 16, 2018
Slide 2: Non-GAAP and forward-looking statements
Portions of this presentation use non-GAAP financial information. Each of those portions is so noted, and a reconciliation of that non-GAAP information to comparable GAAP information is provided in a footnote or in the appendix at the end of this presentation. This presentation contains forward-
Slide 3: Third Quarter 2018 Highlights
Third Quarter 2018 Highlights Delivering Strong Returns and Improved Efficiency 1 EPS ROTCE ROA Reported $0.83 +196% Reported 40.5% +2,834bps Reported 2.72% +173bps Adjusted1 $0.36 +13% Adjusted1 17.9% +439bps Adjusted1 1.21% +12bps Continued strong earnings power Positive Operating Leverage Mer
Slide 4: Financial Results
FINANCIAL RESULTS V¥ FIRST HORIZON NATIONAL CORPORATION
Slide 5: Financial Results
Financial Results Actuals vs Adjusted1 vs Financial Results 3Q18 Adjusted EPS up 13% YOY Actuals Adjusted1 $ in millio ns except per share data Actuals Adjusted1 2Q18 3Q17 2Q18 3Q17 Positive operating leverage on adjusted revenue increase of 1% and Net Interest Income $306 $306 -2% +46% -2% +46%
Slide 6: Significant Positive Impact from Visa B Shares Monetization
Significant Positive Impact from Visa B Shares Monetization Meaningful Improvement in Tangible Book Value and TCE/TA Impact to Tangible Book Value (TBV)1 2Q18 $0.64 Increase in TBV per Share 3Q18 $7.94 +$0.36 NIAC (Ex-Visa B Monetization) $8.58 TBV per Share TBV per Share +$0.49 Visa B Monetization
Slide 7: Net Interest Income and Net Interest Margin Trends
Net Interest Income and Net Interest Margin Trends Loan Betas Have Outpaced Deposit Betas NIM expansion from 2.92% in 1Q17 to 3.44% in 6.00% 66% Loan Beta vs 36% Deposit Beta 4.84% 3Q18 driven by commercial loan growth, asset 5.00% 4.00% 3.65% sensitivity and accretion 3.00% 1.93% 66% of the loa
Slide 8: Building a Stronger Balance Sheet
Building a Stronger Balance Sheet Economic Profit Focus Driving Improved Loan Portfolio Mix Continued strong growth in highly profitable specialty lending areas Growth in Higher Return Areas1 Loans to Mortgage Companies increase driven by market share growth Loans to Mortgage Companies Strengt
Slide 9: Asset Quality
Asset Quality Stable Credit Trends Reflect Strong Underwriting Discipline Credit environment remains stable Asset Quality Highlights and benign ($ in millions) 3Q17 4Q17 1Q18 2Q18 3Q18 Net charge-off ratio 0.02% in 3Q18 Charge-offs ($11) ($17) ($8) ($10) ($9) Recoveries $8 $9 $7 $8 $8 Non-stra
Slide 10: Successful Execution on Capital Bank Merger Priorities
Successful Execution on Capital Bank Merger Priorities Improved EPS Accretion From Higher Cost Savings and Revenue Synergies Current earnings accretion estimate more than 2x original announcement Cost savings of $16mm achieved in 3Q18 ~75% of total expected cost saves now in run rate Total o
Slide 11: Well-Positioned For Consistent Top-Quartile Returns
Well-Positioned For Consistent Top-Quartile Returns ROTCE1 ROA 40.5% 2.72% 17%-19%2 1.25%-1.45%2 17.4% 18.2% 17.9% 1.17% 1.22% 1.21% 14.1% 12.6% 0.95% 0.86% 1Q18 2Q18 3Q18 1Q18 2Q18 3Q18 Reported Adjusted¹ Reported Adjusted¹ Efficiency Ratio Below 60%2 75.9% 71.7% 66.6% 65.0% 65.1% 64.0% 1Q18 2Q18 3
Slide 12: Third Quarter 2018 Highlights
Third Quarter 2018 Highlights Continued strong earnings power Positive Operating Leverage Merger cost saves drove lower expenses Excellent credit quality Specialty lending up 12% LQ annualized Growth in Specialty & New Markets Mid-Atlantic and Florida retail deposits up 5% and 3% LQ, respe
Slide 13: Appendix
APPENDIX V¥ FIRST HORIZON NATIONAL CORPORATION 13
Slide 14: 3Q18 Credit Quality Summary by Portfolio
3Q18 Credit Quality Summary by Portfolio Regional Banking Corporate5 Non-Strategic FHNC Commercial Commercial HE & Permanent HE & Permanent ($ in millions) (C&I & CRE Other1 Subtotal (C&I & Other2 Total HELOC Mortgage HELOC Mortgage Other) Other) Period End Loans $15,675 $4,237 $5,749 $542 $26,203 $
Slide 15: Select C&I and CRE Portfolio Metrics
Select C&I and CRE Portfolio Metrics 3Q18 Average Regional Bank Commercial Loans C&I: Loans to Mortgage Companies Ene rgy, 1% ($ in billions) Corre spondent, 2% Franchise Finance , 4% $2.4 He althcare, 4% $2.1 $2.1 $2.1 $2.1 Corporate, 5% $2.0 $1.9 $1.9 $1.9 $1.8 $1.6 $1.5 Asse t-Based C ommercial,
Slide 16: Consumer Portfolio & Non-Strategic Overview
Consumer Portfolio & Non-Strategic Overview Percent of Home Equity Portfolio: HELOC Draw vs Repayment Balances Months Left in Draw Period 70% 60% 64% $1.1B 50% 40% 30% $0.5B 20% 10% 7% 6% 7% 8% 8% 0% In Draw In Repayment 0-12 13-24 25-36 37-48 49-60 >60 Non-Strategic Consumer Real Estate Run-Off Mor
Slide 17: Notable Items
NOTABLE ITEMS Pre-Tax Pre-Tax 2017 1 2018 Amount Amount1 Acquisition Expense ($31.4mm) 1Q None Gain on property sale $3.3mm Mortgage Repurchase Reserve Release $20.0mm Acquisition Expense ($43.2mm) Acquisition Expense ($6.4mm) 2Q Effective tax rate adjustment associated with reversal of a capital lo
Slide 18: Capital Bank Acquisition Expenses
Capital Bank Acquisition Expenses ($ in millions) 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 Employee compensation, incentives and benefits (a) $2.0 $2.5 $3.9 $16.8 $0.2 $- Occupancy (b) $0.1 $2.2 $- $- $- $- Miscellaneous expense (c) $1.4 $3.1 $2.0 $1.0 $0.1 $0.1 Professional fees (d) $4.6 $9.0 $5.6 $20.1 $3.5
Slide 19: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of adjusted fee income, adjusted revenue, adjusted noninterest expense, adjusted pre-tax income, adjusted net income available to common, and adjusted earnings per share. That information is not presented accordin
Slide 20: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of adjusted efficiency ratio, return on tangible common equity, adjusted return on tangible common equity, and adjusted return on average assets. That information is not presented according to generally accepted a
Slide 21: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of the ratio of tangible common equity to tangible assets and tangible book value per share. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP
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