First Horizon Corporation · NYSE:FHN
First Horizon — Q3 2022 Earnings Presentation
25 slides from First Horizon's earnings presentation, Oct 18, 2022
Slide 1: Third Quarter 2022 Earnings
Third Quarter 2022 Earnings October 18, 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: 3Q22 GAAP financial summary
3Q22 GAAP financial summary1 Reported 3Q22 Change vs. $s in millions except per share data 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 $/bps % $/bps % Net interest income $ 662 $ 542 $ 479 $ 498 $ 492 $ 120 22 % $ 170 35 % Fee income 213 201 229 247 247 12 6% (34) (14)% Total revenue 875 743 707 745 738 132
Slide 4: Table of contents
Table of contents 3Q22 key messages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3Q22 overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 5: Well positioned to benefit given outlook for rates
Well positioned to benefit given outlook for rates1 Adjusted EPS Adjusted ROTCE TBV $0.44 17.9% $9.72 +24% -4% +37% Core Adjusted Adjusted Net Interest Income Noninterest Income PPNR +1% ~$82 million +8.3% IBKC Merger Adjusted Asset Sensitive to Annualized Revenue Expense +100 bp Shock Scenario Syne
Slide 6: 3Q22 robust PPNR muted by higher provision despite continued strong credit
3Q22 robust PPNR muted by higher provision despite continued strong credit Adjusted EPS of $0.44 and PPNR of $403 million1 • Adjusted revenue of $846 million increased $113 million, or 15%, QoQ as strength in NII was partially offset by lower noninterest income largely given macroeconomic impacts –
Slide 7: 3Q22 notable items
3Q22 notable items1 GAAP results impacted by $5 million after-tax, or $0.01 per share, net benefit of notable items ($s in millions, except per share data) Notable Items Pre-tax Notable Items 3Q22 IBKC merger-related notable items Noninterest expense: • IBKC merger-related expense of $3 million Tota
Slide 8: 3Q22 adjusted financial highlights
3Q22 adjusted financial highlights1 PPNR up 37% driven by strength in NII 3Q22 vs. 2Q22 Highlights 3Q22 Change vs. • Adjusted EPS of $0.44 vs. $0.34; includes a $0.04 per share reduction tied to a change in provision $s in millions except per share data 3Q22 2Q22 3Q21 2Q22 3Q21 for credit losses $/b
Slide 9: NII trends reflect the benefit of rising rates and loan growth
NII trends reflect the benefit of rising rates and loan growth 1 Results reflect higher investment portfolio income and 4% C&I loan growth ex. PPP and LMC ($s in millions) FTE NII and NIM Trends 3Q22 vs. 2Q22 Highlights $666 $545 $659 • FTE NII up $121 million, or 22%, and NIM up 75 bps $495 $502 $4
Slide 10: Adjusted fee income trends impacted by higher rates & divestiture of title business
Adjusted fee income trends impacted by higher rates & divestiture of title business1 Results driven by declines in mortgage banking, divestiture of title business & fixed income 3Q22 vs. 2Q22 Highlights 3Q22 Change vs. • Adjusted fee income down $7 million, or 4%, $s in millions 3Q22 2Q22 1Q22 4Q21
Slide 11: Adjusted expense up 1% driven by increases in deferred compensation
Adjusted expense up 1% driven by increases in deferred compensation1 Results largely reflect lower salaries and revenue-based incentives and commissions 3Q22 vs. 2Q22 Highlights • Adjusted expense of $444 million increased $6 million, or 1%, as higher deferred 3Q22 Change vs. compensation expense wa
Slide 12: Total loan growth of 4% ex PPP & LMC
Total loan growth of 4% ex PPP & LMC1 C&I ex PPP & LMC up 4% QoQ Loan trends Period-end Average 3Q22 vs. 2Q22 Highlights • Loans of $56.5 billion up $1.0 billion driven by a 1% $56.5B $57.4B $56.5B increase in commercial and a 4% in consumer $55.4B 5% $54.7B $54.1B $55.6B 6% —% 5% 9% 1% 1% 9% 7% 6%
Slide 13: Deposit costs reflect pricing discipline and impact of rising rates
Deposit costs reflect pricing discipline and impact of rising rates1 Interest-bearing deposit betas of 18% in the quarter Interest-bearing liabilities & DDA trends 3Q22 vs. 2Q22 Highlights Period-end Average $78.4B $79.0B $78.4B • Average deposits of $68.1 billion decreased $74.5B $75.8B $3.8 billio
Slide 14: Continued strong credit quality
Continued strong credit quality Reserve build reflects the impact of loan growth and revised macroeconomic outlook ($s in millions) 3Q22 vs. 2Q22 Highlights Provision, credit losses, and net charge-offs • Net charge-offs of $12 million remained relatively stable $60 • NPL ratio of 51 bps decreased 2
Slide 15: Strong capital position
Strong capital position1 Capital levels 3Q22 vs. 2Q22 Highlights • TBVPS of $9.72 decreased 5% driven by a $0.87 reduction tied to MTM valuation adjustments on AFS securities and cash 12.6% 13.2% 13.0% 13.1% flow hedges 12.3% • CET1 ratio remained strong at 9.9% 11.2% 11.0% 11.8% 11.6% 11.7% – The b
Slide 16: IBKC merger integration and TD acquisition update
IBKC merger integration and TD acquisition update IBKC Merger Highlights Targeting annualized cost saves of ~$200 million by 4Q22 IBKC • Remain on track to meet annualized cost saves target by 4Q22 Merger Achieved ~$46 million of savings in 3Q22 In Period Savings Actual Estimated 2021 2022 ~$92mm ~$
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 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 4Q22 $ (7) 4Q22 $ 8 4Q22 $ 2 1Q23 $ (7) 1Q23 $ 7 1Q23 $ 2 2Q23-4
Slide 20: Notable Items
Notable Items ($s in millions except per share data) Favorable / (Unfavorable) (In millions, except per share data) 3Q22 2Q22 1Q22 4Q21 3Q21 Noninterest income: Gain on mortgage servicing rights (mortgage banking and title) $ — $ (12) $ — $ — $ — Retirement of legacy IBKC TruPS (other noninterest in
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. Adjusted FHN historical quarterly income statements 3Q22 2Q22 1Q22 4Q21
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. ($s in millions, except per share data) 3Q22 2Q22 1Q22 4Q21 3Q21 Tangibl
Slide 23: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. ($s in millions, except per share data) 3Q22 2Q22 1Q22 4Q21 3Q21 Adjuste
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. $ in millions except per share data) 3Q22 2Q22 1Q22 4Q21 3Q21 Adjusted N
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. Period-end Average $s in millions 3Q22 2Q22 3Q22 vs 2Q22 3Q22 2Q22 3Q22