First Horizon Corporation · NYSE:FHN
First Horizon — Q2 2022 Earnings Presentation
25 slides from First Horizon's earnings presentation, Jul 19, 2022
Slide 1: Second Quarter 2022 Earnings
Second Quarter 2022 Earnings July 19, 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: 2Q22 GAAP financial summary
2Q22 GAAP financial summary1 Reported 2Q22 Change vs. $s in millions except per share data 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 $/bps % $/bps % Net interest income $ 542 $ 479 $ 498 $ 492 $ 497 $ 63 13 % $ 45 9% Fee income 201 229 247 247 285 (28) (12)% (84) (29)% Total revenue 743 707 745 738 781 36
Slide 4: Table of contents
Table of contents 2Q22 key messages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2Q22 overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 5: Well positioned to benefit given economic recovery and outlook for rates
Well positioned to benefit given economic recovery and outlook for rates Adjusted EPS1 Adjusted ROTCE1 TBV $0.34 14.2% $10.18 +15% -16% -4% Core Adjusted Adjusted Net Interest Income Noninterest Income Expense +18% ~$70 million +11.8% IBKC Merger Adjusted Asset Sensitive to Annualized Revenue PPNR +
Slide 6: 2Q22 robust PPNR muted by higher provision despite continued strong credit
2Q22 robust PPNR muted by higher provision despite continued strong credit Adjusted EPS of $0.34 and PPNR of $295 million1 • Adjusted revenue of $733 million increased $29 million, or 4%, QoQ as strength in NII was partially offset by lower noninterest income largely given macroeconomic impacts – NI
Slide 7: 2Q22 notable items
2Q22 notable items1 GAAP results reduced by $29 million after-tax, or $0.05 per share, of notable items ($s in millions, except per share data) Notable Items Pre-tax Notable Items 2Q22 IBKC merger-related notable items Noninterest expense: • IBKC merger-related expense of $13 million Total nonintere
Slide 8: 2Q22 adjusted financial highlights
2Q22 adjusted financial highlights1 PPNR up 18% driven by strength in NII and lower expense 2Q22 vs. 1Q22 Highlights 2Q22 Change vs. • Adjusted EPS of $0.34 vs. $0.38; includes a $0.10 per share reduction tied to a change in provision $s in millions except per share data 2Q22 1Q22 2Q21 1Q22 2Q21 for
Slide 9: NII trends reflect the benefit of rising rates and loan growth
NII trends reflect the benefit of rising rates and loan growth 1 Results reflect higher investment portfolio income and 5% C&I loan growth ex. PPP and LMC ($s in millions) FTE NII and NIM Trends 2Q22 vs. 1Q22 Highlights $545 $500 $495 $502 $482 $532 • FTE NII up $63 million, or 13%, and NIM up 37 bp
Slide 10: Adjusted fee income trends impacted by higher rates and macro volatility
Adjusted fee income trends impacted by higher rates and macro volatility1 Results driven by declines in fixed income and deferred comp 2Q22 vs. 1Q22 Highlights 2Q22 Change vs. • Adjusted fee income decreased $35 million, $s in millions 2Q22 1Q22 4Q21 3Q21 2Q21 1Q22 2Q21 or 16%, driven by a reduction
Slide 11: Adjusted expense down 4% driven by lower personnel costs
Adjusted expense down 4% driven by lower personnel costs Results largely reflect lower revenue-based incentives and commissions and deferred comp 2Q22 vs. 1Q22 Highlights • Adjusted expense of $438 million decreased $17 million, or 4%, largely as lower personnel 2Q22 Change vs. costs were partially
Slide 12: Total loan growth of 3%
Total loan growth of 3%1 C&I ex PPP & LMC up 5% QoQ 2Q22 vs. 1Q22 Highlights Loan trends Period-end Average • Loans of $55.6 billion up $1.5 billion on a 3% increase in $56.7B $56.5B $55.5B $55.6B commercial and consumer $55.0B 6% $54.7B $54.1B 6% 9% 7% 8% 9% 7% 1% 7% 1% 1% 5% 2% 2% – C&I loan growt
Slide 13: Deposit costs reflect pricing discipline and impact of rising rates
Deposit costs reflect pricing discipline and impact of rising rates1 Improved deposit mix with interest-bearing deposits down $2.1 billion Interest-bearing liabilities & DDA trends 2Q22 vs. 1Q22 Highlights Period-end Average $77.7B $77.9B $78.4B $79.0B $78.4B • Average deposits of $71.9 billion decr
Slide 14: Continued strong credit quality
Continued strong credit quality Reserve build reflects the impact of loan growth and revised macroeconomic outlook ($s in millions) 2Q22 vs. 1Q22 Highlights Provision, credit losses, and net charge-offs • Net charge-offs of $12 million remained relatively stable • NPL ratio of 53 bps decreased 7 bps
Slide 15: Strong capital position
Strong capital position1 Capital levels 2Q22 vs. 1Q22 Highlights • TBVPS of $10.18 decreased 3% driven by a $0.43 reduction tied 13.1% 12.6% 13.2% 13.0% 12.3% to MTM valuation adjustments on securities 11.4% 11.2% 11.8% 11.6% • CET1 ratio remained strong at 9.8% 11.0% 10.3% 10.1% 9.9% 9.8% – The ben
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 • Successfully completed systems and signage conversion Merger Achieved ~$35 million of savings • Remain on track to meet annualized cost saves target by 4Q22 in 2Q2
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 3Q22 $ (8) 3Q22 $ 12 3Q22 $ 3 4Q22 $ (7) 4Q22 $ 10 4Q22 $ 3 2023
Slide 20: Notable Items
Notable Items ($s in millions except per share data) Favorable / (Unfavorable) (In millions, except per share data) 2Q22 1Q22 4Q21 3Q21 2Q21 Noninterest income: Gain on mortgage servicing rights (mortgage banking and title) $ (12) $ — $ — $ — $ — Purchase accounting gain (other noninterest income)1
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 2Q22 1Q22 4Q21 3Q21
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. ($s in millions, except per share data) 2Q22 1Q22 4Q21 3Q21 2Q21 Tangibl
Slide 23: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. ($s in millions, except per share data) 2Q22 1Q22 4Q21 3Q21 2Q21 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) 2Q22 1Q22 4Q21 3Q21 2Q21 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 2Q22 1Q22 2Q22 vs 1Q22 2Q22 1Q22 2Q22