First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Investor Day (November 2018)
26 slides from First Horizon's investor day presentation, Nov 6, 2018
Slide 1: Commercial Banking: Specialization Is Our Advantage
Commercial Banking: Specialization Is Our Advantage Proven | Focused | Better Todd Jones | EVP, Wholesale Banking
Slide 2: Portions of this presentation use non-GAAP financial information. Each of those portions is so
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. Annualized, pro forma, projected and es
Slide 3: Commercial Banking Is Building from a Position of Strength
Commercial Banking Is Building from a Position of Strength 1 We build deep, profitable relationships 2 We have multiple growth opportunities 3 We have unique, high-return specialty banking areas Proven | Focused | Better 2
Slide 4: The Commercial Bank Is Strong and Diversified
The Commercial Bank Is Strong and Diversified Loan Mix Deposit Mix Mid-Atlantic East TN 15% 21% Specialty Average Loans Average Deposits 30% $19B $9B Specialty Middle TN 11% 51% Texas East TN 0.2% Middle TN 8% Florida 17% Business 3% West TN Community Relationships Employees Florida 6% 5% West TN ~9
Slide 5: We Have Delivered Strong Balance Sheet Growth
We Have Delivered Strong Balance Sheet Growth Loans Deposits $19.0 $9.2 14% $4.7B 11% CAGR Added Loans CAGR from Capital Bank $5.3 $8.1 $1.2B Added Deposits from Capital Bank 3Q13 3Q18 3Q13 3Q18 Proven CAGRs calculated using full-year average balances from 2013 to 2017. 4
Slide 6: Customers Value Our Differentiated Approach
We Are the Lead Bank for 76% of Our Customers Non-Lead Bank 24% Customers Value Our Lead Bank Differentiated Approach 76% Localized decision making Long-tenured employees 94% of Our Customers Are Highly Satisfied Community involvement Average Below Average 1% Brand recognition in Tennessee 5% Excell
Slide 7: We transformed the profitability profile in Commercial Banking
84% Increase in Economic Profit Per Client Since 20151 We transformed the Drivers of Economic Profit Growth Full relationships with deposit emphasis profitability profile in Increased average loan relationship size Commercial Banking Disciplined use of risk-adjusted loan pricing 136% Increase in Net
Slide 8: Our customer data helps us build deep, profitable relationships
Our customer data helps us build deep, profitable relationships Focused 7
Slide 9: We Use Profitability Data on Every Relationship
We Use Profitability Data on Every Relationship Loan Accounts: 24 Revenue: $476,521 2018 AVG Bal: $10,557,131 Expense: -64,861 Deposit Accounts 30 Expected Loss: -7,859 2018 AVG Bal: $9,418,772 Taxes: -155,463 Fee Inc./Bal.: 1.76% Net Income: $248,337 Relationship Net Income Treasury Rel.: Yes Alloc
Slide 10: Improving Existing Relationship Manager (RM) Productivity
Improving Existing Relationship Manager (RM) Productivity Loan Portfolio by RM Deposits by RM 300 300 250 250 200 200 Deposits ($mm) Loans ($mm) 150 150 100 100 50 50 0 0 1 5 9 13 17Legacy 21 25 29 FTB 33 37Commercial RMs 41 45 49 53 57 61 65 69 73 77 81 85 89 1 5 9 13 17 Legacy FTB 21 25 29 33 37 C
Slide 11: Improving New Capital Bank RM Productivity
Improving New Capital Bank RM Productivity Loan Portfolio by RM Deposits by RM 300 100 90 250 80 70 200 60 FTB Avg $58mm 150 50 40 100 30 FTB Avg $77mm 20 CBF Avg $17mm 50 CBF Avg $62mm 10 0 0 1 4 7 10131619222528313437404346495255 CBF Commercial RMs 1 4 7 10 13 16CBF 19 22Commercial 25 28 31 34RMs
Slide 12: Pretax Income Opportunity from Shifting Below Average RMs
$42mm Pretax Income Opportunity from Shifting Below Portfolio Average RMs to Commercial Banking Average1 Deepening relationships and driving RM productivity drives $800mm continued profitable growth Improving Capital Bank RM Loan Opportunity2 Production to FHN Levels $2.3B Deposit Opportunity2 Focus
Slide 13: We have a proven blueprint for profitable growth
We have a proven blueprint for profitable growth Better 12
Slide 14: We Will Adapt the Nashville Playbook to New Markets
We Will Adapt the Nashville Playbook to New Markets North and South Carolina $1B current commercial deposits $3B current commercial loans Moving up-market for larger relationships Deepening relationships with deposit cross-sell Targeting key industries: Manufacturing and Healthcare South Florida $30
Slide 15: Specialization creates advantages
Specialization creates advantages Better 14
Slide 16: Specialty Banking Areas: High Growth with High Profitability
We Have More Than Doubled Specialty Loans in 5 Years Total Specialty Loans ($B) $10.4 134% Specialty Banking Areas: $4.4 High Growth with High Profitability 3Q13 3Q18 Deep industry experience adds customer value Specialty Relationship Profitability & Profit Growth Fewer, more focused competitors Str
Slide 17: Specialty Banking Areas Deliver Strong Loan Growth
Specialty Banking Areas Deliver Strong Loan Growth Loans to Mortgage Companies Asset-Based Lending Franchise Finance $2.1B $0.7B $2.0B +21% +75% +124% $0.6B $1.1B $1.0B 3Q13 3Q18 3Q13 3Q18 3Q17¹ 3Q18 Commercial Real Estate Healthcare Other2 $3.2B $0.8B $1.6B +43% +253% +130% $1.1B $0.3B $0.9B 3Q13 3
Slide 18: Loans to Mortgage Companies
$2.1B $9mm Average Loans Average Loan Relationship Loans to Mortgage ~270 23% Companies Client Relationships Efficiency Ratio Lines of credit for mortgage lenders secured by high quality, liquid mortgage loans Economic Profit Growth Nationwide footprint $23mm Most economically profitable lending bus
Slide 19: Asset Based Lending
$2.0B $14mm Average Loans Average Loan Relationship Asset Based Lending 50% 25% Working capital credit facilities secured by 5yr EP Growth Efficiency Ratio receivables, inventory, and equipment National footprint, with focus on the Southeast Customer Profile Focus 77% of economic capital generates p
Slide 20: Franchise Finance
$0.8B $9mm Average Loans Average Loan Relationship Franchise Finance 26% 27% Lending to franchisors, franchisees, regional chains, RAROC Efficiency Ratio and private equity sponsors Credit primarily secured by cash flows and equipment Portfolio Composition Representative Brands Acquired portfolio an
Slide 21: Commercial Real Estate
$3.2B $14mm Average Loans Average Relationship Commercial Real Estate 28% Efficiency Ratio Acquisition, development, and construction lending Predominantly Southeast regional footprint Portfolio Composition Focused on institutional quality projects Other Balanced asset quality and growth mindset Lan
Slide 22: We are focused on capturing deposit opportunities across our Specialty Banking areas
Mortgage Warehouse Targeting based on corporate and escrow deposits We are focused on Correspondent Enhancing our digital platform to improve the capturing deposit customer experience opportunities across our Specialty Banking areas Corporate Creating and implementing new treasury management product
Slide 23: Commercial Banking Is Building from a Position of Strength
Commercial Banking Is Building from a Position of Strength 1 We build deep, profitable relationships 2 We have multiple growth opportunities 3 We have unique, high-return specialty banking areas Proven | Focused | Better 22
Slide 24: Commercial Banking: Specialization Is Our Advantage
Commercial Banking: Specialization Is Our Advantage Proven | Focused | Better Todd Jones | EVP, Wholesale Banking
Slide 25: Notes
Notes Slide Note Comment 6 (1) Growth in economic profit per relationship is measured from 1Q15 to 1Q18. 11 (1) Pretax income opportunity source: Galt. 11 (2) Loan and Deposit growth opportunities assume approximately 60 Commercial RMs in Legacy Capital Bank markets. 16 (1) Franchise Finance strateg
Slide 26: AAA}: oF AG
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First Horizon National — Investor Day (November 2018) on 6ix