First Horizon Corporation · NYSE:FHN
First Horizon — Q2 2022 Earnings Presentation
26 slides from First Horizon's earnings presentation, Jul 19, 2022
Slide 1: First Horizon Reports Second Quarter 2022 Results
First Horizon Corporation Reports Second Quarter 2022 Net Income Available to Common Shareholders of $166 Million, or EPS of $0.29; $195 Million, or $0.34, on an Adjusted Basis* Pre-provision net revenue up 19% from the prior quarter and up 18% on an Adjusted basis* ROTCE of 12.1% and Adjusted ROTCE
Slide 2: Second Quarter 2022 Versus First Quarter 2022 Highlights
Second Quarter 2022 Versus First Quarter 2022 Highlights • Total revenue of $743 million increased $36 million and Adjusted revenue of $733 million increased $29 million reflecting the benefit of higher net interest income partially offset by lower noninterest income. • Net interest income of $542 m
Slide 3: Summary Results
SUMMARY RESULTS Quarterly, Unaudited 2Q22 Change vs. ($s in millions, except per share and balance sheet data) 2Q22 1Q22 2Q21 1Q22 2Q21 $/bp % $/bp % Income Statement Interest income - taxable equivalent1 $ 586 $ 513 $ 545 $ 73 14 % $ 41 8% Interest expense- taxable equivalent1 41 31 45 10 32 (4) (9
Slide 4: Second Quarter 2022 versus First Quarter 2022
Second Quarter 2022 versus First Quarter 2022 Net interest income Net interest income of $542 million increased $63 million from first quarter 2022 despite a $6 million reduction tied to net merger-related and PPP benefits. Core net interest income up $70 million as the benefit of higher rates, loan
Slide 5: Capital, Income Taxes and Forward-Looking Statements
Capital CET1 ratio of 9.8% in second quarter 2022 remained strong with 10.0% in first quarter 2022. Total capital ratio of 13.0% vs. 13.2% in first quarter 2022. Income taxes The second quarter 2022 effective tax rate of 21.3% compares with 22.4% in first quarter 2022. On an adjusted basis, the effe
Slide 6: Non-GAAP Notes and About First Horizon
required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; and risk-weighted assets, which is a measure of
Slide 7: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT Quarterly, Unaudited 2Q22 Change vs. ($s in millions, except per share data) 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 $ % $ % Interest income - taxable equivalent1 $ 586 $ 513 $ 534 $ 536 $ 545 $ 73 14 % $ 41 8% Interest expense- taxable equivalent1 41 31 33 41 45 10 32 (4) (
Slide 8: Adjusted Financial Data
ADJUSTED5 FINANCIAL DATA - SEE NOTABLE ITEMS ON PAGE 9 Quarterly, Unaudited 2Q22 Change vs. ($s in millions, except per share data) 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 $ % $ % Net interest income (FTE)1 $ 545 $ 482 $ 502 $ 495 $ 500 $ 63 13 % $ 45 9% Adjusted noninterest income: Fixed income 51 73 82
Slide 9: Notable Items
NOTABLE ITEMS Quarterly, Unaudited (In millions) 2Q22 1Q22 4Q21 3Q21 2Q21 Summary of Notable Items: IBKC Purchase accounting gain (other noninterest income)* $ — $ — $ — $ — $ (2) Gain/(loss) on TRUPS redemption (other noninterest income) — — (3) (23) — IBKC Branch sale gain (other noninterest incom
Slide 10: Financial Ratios
FINANCIAL RATIOS Quarterly, Unaudited 2Q22 Change vs. 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 FINANCIAL RATIOS $/bp % $/bp % Net interest margin 2.74 % 2.37 % 2.42 % 2.41 % 2.47 % 37 bp 27 bp Return on average assets 0.82 % 0.90 % 1.02 % 1.05 % 1.42 % (8) (60) Adjusted return on average assets4 0.95 % 1.
Slide 11: Consolidated Period-End Balance Sheet
CONSOLIDATED PERIOD-END BALANCE SHEET Quarterly, Unaudited 2Q22 Change vs. (In millions) 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 $ % $ % Assets: Loans and leases: Commercial, financial, and industrial (C&I) $ 31,276 $ 30,798 $ 31,068 $ 31,516 $ 32,528 $ 478 2% $ (1,252) (4)% Commercial real estate 12,942
Slide 12: Consolidated Average Balance Sheet
CONSOLIDATED AVERAGE BALANCE SHEET Quarterly, Unaudited 2Q22 Change vs. (In millions) 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 $ % $ % Assets: Loans and leases: Commercial, financial, and industrial (C&I) $ 30,963 $ 30,215 $ 30,780 $ 31,477 $ 32,540 $ 747 2% $ (1,577) (5)% Commercial real estate 12,626 12
Slide 13: Net Interest Income and Average Balance Sheet: Yields and Rates
CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCE SHEET: YIELDS AND RATES Quarterly, Unaudited 2Q22 Change vs. 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 Income/ Income/ Income/ Income/ Income/ (In millions, except rates) Expense Rate Expense Rate Expense Rate Expense Rate Expense Rate Income/Expense Inc
Slide 14: Nonperforming Loans and Leases
CONSOLIDATED NONPERFORMING LOANS AND LEASES ("NPL") Quarterly, Unaudited As of 2Q22 change vs. (In millions, except ratio data) 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 $ % $ % Nonperforming loans and leases Commercial, financial, and industrial (C&I) $ 129 $ 153 $ 125 $ 144 $ 122 $ (24) (16)% $ 6 5% Comm
Slide 15: Net Charge-Offs (Recoveries)
CONSOLIDATED NET CHARGE-OFFS (RECOVERIES) Quarterly, Unaudited As of 2Q22 change vs. (In millions, except ratio data) 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 Charge-off, Recoveries and Related Ratios $ % $ % Gross Charge-offs Commercial, financial, and industrial (C&I) $ 12 $ 13 $ 5 $ 12 $ 2 $ (1) (6)% $
Slide 16: Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments
CONSOLIDATED ALLOWANCE FOR LOAN AND LEASE LOSSES AND RESERVE FOR UNFUNDED COMMITMENTS Quarterly, Unaudited As of 2Q22 Change vs. (In millions) 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 Summary of Changes in the Components of the Allowance For Credit Losses $ % $ % Allowance for loan and lease losses - begi
Slide 17: Asset Quality Ratios - Allowance for Loan and Lease Losses
CONSOLIDATED ASSET QUALITY RATIOS - ALLOWANCE FOR LOAN AND LEASE LOSSES Quarterly, Unaudited As of 2Q22 1Q22 4Q21 3Q21 2Q21 Allowance for loans and lease losses to loans and leases Commercial, financial, and industrial (C&I) 0.88 % 0.93 % 1.07 % 1.19 % 1.18 % Commercial real estate 1.09 % 1.21 % 1.2
Slide 18: Regional Banking
REGIONAL BANKING Quarterly, Unaudited 2Q22 Change vs. 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 $/bp % $/bp % Income Statement (millions) Net interest income $ 465 $ 426 $ 449 $ 444 $ 444 $ 39 9% $ 21 5% Noninterest income 114 114 115 113 109 — — 5 5% Total revenue 579 540 564 557 553 39 7 26 5% Noninteres
Slide 19: Specialty Banking
SPECIALTY BANKING Quarterly, Unaudited 2Q22 Change vs. 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 $/bp % $/bp % Income Statement (millions) Net interest income $ 141 $ 144 $ 154 $ 154 $ 153 $ (3) (2)% $ (12) (8)% Noninterest income 96 105 120 142 150 (9) (9) (54) (36) Total revenue 237 250 274 295 303 (13)
Slide 20: Corporate and Footnotes
CORPORATE Quarterly, Unaudited 2Q22 Change vs. 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 $ % $ % Income Statement (millions) Net interest income/(expense) $ (64) $ (91) $ (104) $ (106) $ (100) $ 27 30 % $ 36 36 % Noninterest income (8) 9 11 (8) 25 (17) NM (33) (132) Total revenues (73) (82) (93) (114) (74)
Slide 21: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in millions, except per share data) 2Q22 1Q22 4Q21 3Q21 2Q21 Tangible Common Equity (Non-GAAP) (A) Total equity (GAAP) $ 8,551 $ 8,696 $ 8,494 $ 8,533 $ 8,566 Less: Noncontrolling interest (a) 295 295 295 295 295 Less: Preferred s
Slide 22: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited 2Q22 1Q22 4Q21 3Q21 2Q21 Notable Non- Notable Non- Notable Non- Notable Non- Notable Non- ($s in millions, except per share data) GAAP Items GAAP GAAP Items GAAP GAAP Items GAAP GAAP Items GAAP GAAP Items GAAP Interest income - FTE $
Slide 23: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in millions, except per share data) 2Q22 1Q22 4Q21 3Q21 2Q21 Adjusted Diluted EPS Net income available to common shareholders ("NIAC") (GAAP) a $ 166 $ 187 $ 219 $ 224 $ 295 Plus Tax effected notable items (Non-GAAP) (a) 29 24 41
Slide 24: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited (In millions) 2Q22 1Q22 4Q21 3Q21 2Q21 Adjusted Noninterest Income as a % of Total Revenue Noninterest income (GAAP) k $ 201 $ 229 $ 247 $ 247 $ 285 Plus notable items (GAAP) (a) (13) (6) — 22 2 Adjusted noninterest income (Non-GAAP)
Slide 25: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in millions) 2Q22 vs 1Q22 NII/NIM Analysis NII % NIM 2Q22 Reported (FTE) $ 545 2.74 % Less: non-core items PPP coupon income and fees 7 0.02 Loan Accretion 15 0.08 IBKC Premium Amortization (8) (0.04) 2Q22 Core (FTE) (Non-GAAP) $
Slide 26: Glossary of Terms
GLOSSARY OF TERMS Common Equity Tier 1 Ratio: Ratio consisting of common equity adjusted for certain unrealized gains/(losses) on available-for-sale securities, less disallowed portions of goodwill, other intangibles, and deferred tax assets as well as certain other regulatory deductions divided by