First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q2 2015 Earnings Presentation
25 slides from First Horizon's earnings presentation, Jul 17, 2015
Slide 1: Less: interest expense 20,390 21,202 20,398 19,317 20,591 (4 )% (1 )% Provision for
Less: interest expense 20,390 21,202 20,398 19,317 20,591 (4 )% (1 )% Provision for loan losses 2,000 5,000 6,000 6,000 5,000 (60 )% (60 )% Noninterest income: Deposit transactions and cash management 28,430 26,551 29,038 28,546 27,911 7 % 2 % Mortgage banking (a) 376 1,584 1,808 41,559 8,861 (76 )%
Slide 2: First Horizon National Corporation Second Quarter 2015 Earnings
First Horizon National Corporation Second Quarter 2015 Earnings July 17, 2015
Slide 3: Non-GAAP and forward-looking statements
2 ▪ 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 fo
Slide 4: Building Franchise Value: Executing Blue Chip Priorities
Building Franchise Value Executing “Blue Chip” Priorities ▪ Being easy to do business with ▪ Providing differentiated customer service ▪ Using the Bonefish to drive profitability 3
Slide 5: Second Quarter 2015 Accomplishments
4 Numbers may not add to total due to rounding. All Non - GAAP numbers are reconciled in the appendix. 1 ROTCE is Non - GAAP. 2 Consolidated PPNR excludes a ~$47mm insurance recovery in 2Q14. This number is Non - GAAP. Second Quarter 2015 Accomplishments 2Q14 - 2Q15 Regional Bank Loan Growth 2Q15 Av
Slide 6: Financial Results
FINANCIAL RESULTS Fa FIRST HORIZON a NATIONALCORPORATION
Slide 7: 2Q15 Consolidated Financial Results
+10% 2Q15 Consolidated Financial Results 6 Net Interest Income Fee Income Expense NIAC Excluding Litigation Charge/Insurance Recovery 1 $ in millions, except EPS Financial Results 2Q15 $167 Loan Loss Provision $130 $218 $2 $51 $0.22 2Q15 vs +6% +3% +34% - 60% - 35% - 33% 1Q15 $157 $130 $376 $5 $(77)
Slide 8: 2Q15 Segment Highlights
2Q15 Segment Highlights 7 Drivers and Impacts Net Income 1 $ in millions, except EPS 2Q15 Per Share Impact 2 Regional Banking Fixed Income Corporate 1 Non - Strategic Total 1 1Q15 $48 $7 $(18) $(114) $(77) 2Q14 $47 $31 $(8) $8 $78 2Q15 $46 $6 $(16) $15 $51 $0.20 $0.03 $(0.07) $0.06 $0.22 ▪ Fixed inc
Slide 9: Regional Banking Financial Results
Regional Banking Financial Results Solid Revenue Growth 8 Net Interest Income Fee Income Expense $ in millions Financial Results 2Q15 $166 Loan Loss Provision Pre - Provision Net Revenue $66 $144 $88 $17 2Q15 vs +12% * +8% +7% NM 1Q15 $154 $60 $136 $79 $5 2Q14 $149 $66 $133 $82 $8 1Q15 +7% +10% +6%
Slide 10: Profitable Growth Opportunities: Regional Banking
$3.39B $3.42B $0.76B $0.75B $1.88B $1.96B $2.11B $2.05B $1.04B $1.61B $1.24B $1.31B $1.44B $1.47B $1.66B $1.76B 1Q15 2Q15 $0 $3 $6 $9 $12 $15 9 Profitable Growth Opportunities: Regional Banking Double Digit Loan Growth Year over Year Regional Banking Loan Growth by Lending Area 1 ▪ Regional Banking
Slide 11: Fixed Income Product Revenue and Expense
10 $0 $1 $2 $3 $0 $250 $500 $750 2008 2009 2010 2011¹ 2012 2013 2014¹ 2015² Revenue Expense Column1 ADR Fixed Income - FTN Financial Financial Results $750mm Fixed Income Product Revenue and Expense ▪ Fixed income product average daily revenue (ADR) at $729k in 2Q15 ▪ 1H15 ADR up over prior year acr
Slide 12: Net Interest Income Sensitivity Impact
11 Net Interest Income Sensitivity Impact 1 NII and Net Interest Margin Balance Sheet Positioned to Benefit from Rising Rates +2.5% $16mm +3.8% +$25mm +6.2% +$40mm +11.3% +$73mm 0% 3% 6% 9% 12% +25bps +50bps +100bps +200bps ▪ NIM up 18 bps linked quarter to 2.92% ▪ NII up $10mm or 6% linked quarter
Slide 13: Improving Productivity and Efficiency
Improving Productivity and Efficiency ▪ Continuing wind - down of Non - Strategic segment ▪ Legal expenses down 27% in 1H15 vs 1H14 ▪ Streamlining end - to - end processes ▪ Committed savings of ~$4mm from IT and loan operations by end of 2015 ▪ Reducing corporate real estate footprint ▪ Decreased s
Slide 14: Asset Quality Trends
13 Non - Performing Assets $0 $100 $200 $300 $400 2Q14 3Q14 4Q14 1Q15 2Q15 NPLs NPLs Held for Sale ORE $400mm Net Charge - Offs Asset Quality Trends Stable to Improving Credit Trends Reserves 1.00% 1.25% 1.50% 1.75% 2.00% $200 $220 $240 $260 2Q14 3Q14 4Q14 1Q15 2Q15 Reserves $ Reserves / Loans % $26
Slide 15: 2Q15 Consolidated Long-Term Targets
14 2Q15 Consolidated Long - Term Targets ROTCE 1 10.4% 15.0 – 20.0% ROA 1 0.87% 1.25 - 1.45% NIM 1 2.92% 3.50 - 4.00% CET1 10.4% 8.0 – 9.0% NCO / Average Loans 1 0.21% 0.30 - 0.70% Fee Income / Revenue 44% 40 - 50% Efficiency Ratio 74% 60 - 65% 1 ROTCE, ROA, NIM, and NCO / Average Loans are annualiz
Slide 16: Closing the Gap to Bonefish Targets
15 Closing the Gap to Bonefish Targets Building a Foundation for Long - Term Earnings Power Current ROTCE / EPS Rise in Interest Rates 1 Target Bonefish ROTCE / EPS Growth Opportunities Economic Profit Improvement Optimize/ Redeploy Capital Continued Efficiencies ▪ Non - Strategic W ind - Down ▪ Inf
Slide 17: Building a Foundation for Attractive Long-Term Earnings Power
16 Building a Foundation for Attractive Long - Term Earnings Power ▪ Proven execution capabilities ▪ Unique size, scope, and strengths ▪ Focused on efficiency, productivity, economic profitability, and growth opportunities ▪ Organizational alignment on the path to achieving long - term bonefish prof
Slide 18: Appendix
APPENDIX FIRST HORIZON |ATIONAL CORPORATION 17
Slide 19: Notable Items
Notable Items 18 Impact to EPS 2 After - Tax Amount 1 Notable Item Pre - Tax Amount Held - for - Sale (Primarily NPL) Portfolio Valuation Adjustment $5.5mm $0.02 $8.2mm Litigation Expense Recovery $31.4mm $0.13 $47.1mm Gains on Sales of Held - for - Sale Loans in Non - Strategic Portfolio $25.2mm $0
Slide 20: 2Q15 Credit Quality Summary by Portfolio
19 2Q15 Credit Quality Summary by Portfolio Numbers may not add to total due to rounding. Data as of 2Q15. NM: Not meaningful. 1 Credit card, Permanent Mortgage, and Other. 2 Credit card, OTC, and Other Consumer. 3 Net charge - offs are annualized. 4 Exercised clean - up calls on jumbo securitizatio
Slide 21: C&I and CRE Portfolio Detail
Construction 33% Land 3% Mini - Perm/Non - Construction 64% 20 C&I and CRE Portfolio Detail $1.1 $1.0 $1.2 $1.6 $1.8 $0.7 $0.9 $0.9 $1.0 $1.6 $0.0 $0.5 $1.0 $1.5 $2.0 2Q14 3Q14 4Q14 1Q15 2Q15 Period End Average ▪ $9.8B C&I portfolio , diversified by industry, managed primarily in Regional Banking ▪
Slide 22: Consumer Portfolio Overview
21 Core Banking Customers TN 61% CA 8% VA 3% GA 3% Other 25% Consumer Portfolio Overview $1.6 $0.7 $0.0 $0.5 $1.0 $1.5 $2.0 In Draw In Repayment HELOC Draw vs Repayment Balances Percent of Home Equity Portfolio: Months Left in Draw Period 21% 17% 15% 8% 5% 34% 0% 5% 10% 15% 20% 25% 30% 35% 40% 0-12
Slide 23: Agency & Non-Agency Update
$0 $150 $300 2Q14 3Q14 4Q14 1Q15 2Q15 GSE New Requests Other New Requests Resolved Pipeline 22 Agency & Non - Agency Update Repurchase Resolution Agreements with Both GSEs Total Pipeline of Repurchase Requests 1 $300mm Mortgage Repurchase Reserve Other Whole Loan Sales and Non - Agency ▪ Represent 5
Slide 24: FH Proprietary Securitizations Litigation
FH Proprietary Securitizations Litigation Certificate Breakdown Paid Off 65% Performing UPB 24% 60D+ Delinquent ³ 4% Cumulative Loss 7% 23 $806mm ($ in millions) Deal FHASI 2007-AR2 1 (Schwab) Senior $50.0 $33.6 $14.0 $12.7 $1.4 $2.4 FHAMS 2006-FA6 (FDIC Alabama) Senior $11.1 $3.7 $5.9 $5.0 $0.9 $1.
Slide 25: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials 24 Slides in this presentation use non - GAAP information of return on tangible common equity, as well as expenses, pre - provision net revenue, and net income excluding certain charges/recoveries and various ratios using those measures. That information is not pres
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