First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q2 2011 Earnings Presentation
32 slides from First Horizon's earnings presentation, Jul 15, 2011
Slide 1: Regional Banking
Regional Banking -Traditional lending and deposit taking, investments, financial planning, trust services, asset management, cash management, and health savings accounts -Correspondent banking which provides credit, depository, and other banking related services to other financial institutions -Firs
Slide 2: First Horizon National Corporation Second Quarter 2011 Earnings
1 First Horizon National Corporation Second Quarter 2011 Earnings July 15, 2011
Slide 3: Forward-looking statements and non-GAAP information
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 forward-lo
Slide 4: FHN Strategic Priorities
3 Optimize business mix for profitability and returns Replace runoff, low margin, Non-Strategic assets with higher margin, Regional Banking assets Focused on improving profitability in all lines of business Capital Markets continues to be strong contributor Improve productivity and efficiency Replac
Slide 5: Successful Execution: Controlling What We Can Control
4 Successful Execution: Controlling What We Can Control Driving Value From Balance Sheet Strong Capital Position Optimize Business Mix For Profitability and Returns Manage Capital1 All data is 2Q11 compared to 1Q11 unless otherwise noted. 1Tier 1, Tier 1 Common, TCE+Reserves/Risk Weighted Assets: cu
Slide 6: Financial Results
Financial Results First HORIZON
Slide 7: Consolidated Financial Results
6 Consolidated Financial Results Net income available to common shareholders of $43mm, diluted EPS of $0.16 Net income from continuing operations of $42mm Core Businesses1 pre-tax income of $63mm; Consolidated pre-tax income of $52mm Provision at $1mm Provision flat to 1Q11 Net charge-offs of $66mm,
Slide 8: Second Quarter 2011 Segment Highlights
7 Regional Banking Capital Markets Corporate Non-Strategic Second Quarter 2011 Segment Highlights 2Q11 Drivers / Impacts Repurchase provision of $25mm in 2Q11 vs. $37mm in 1Q11 $206 $(147) 2Q11 Revenue 2Q11 Expense $83 $(67) $9 $(36) $63 $(59) Core Business (subtotal) Total $299 $(250) $362 $(309) 1
Slide 9: Successful Execution: Balance Sheet and NIM
8 Successful Execution: Balance Sheet and NIM Period end total assets at $25.0B in 2Q11 Period end Regional Banking loans increased $345mm or 3% from 1Q11, including $199mm growth in loans to mortgage companies Period end Non-Strategic loans decreased $281mm or 5% from 1Q11 Consolidated average core
Slide 10: Driving More Value from the Balance Sheet
Current loan composition in Regional Bank reflects desirable mix for consolidated balance sheet Trends in loan pipeline shifting towards more attractive mix with an emphasis on C&I loans (Corporate and Asset Based Lending; industries in pipeline include medical, manufacturing and government); opport
Slide 11: Improving Productivity and Efficiency
10 Successful Execution: Improving Productivity and Efficiency $110mm Identified in Cost Savings Goal of 60%-65% Efficiency Ratio Core Business Expenses1 Non-Strategic Expenses $600mm $100mm Capital Markets Regional Bank Corporate $110mm identified in cost savings, in addition to expected continued
Slide 12: Mortgage Repurchase Reserve and Pipeline
11 Numbers may not add due to rounding. 1Requests reflect pipeline as of each respective quarter end. 2As of 6/30/11. Based on UPB. The pipeline represents active investor claims and mortgage insurance (MI) cancellations under review, both of which could occur on the same loan. Excludes MI cancellat
Slide 13: Private Securitizations
12 Private Securitizations Numbers may not add to total due to rounding. Data as of 5/30/11. June Remits. Data source: First American Core Logic Loan Performance Database/Company Analysis. FHN has not verified the accuracy of this data. 1Origination data represents total originations of active deals
Slide 14: Asset Quality Trends Continue to Improve
13 $150mm Successful Execution: Asset Quality Trends Continue to Improve Reserves and Net Charge-Offs Reserves vs. Peers2 Data as of 6/30/11, unless otherwise noted. 2Source: SNL. Peer Median includes top 50 publicly traded U.S. banks by total asset size as of 1Q11. Numbers may not add due to roundi
Slide 15: Non-Performing Assets Continue to Decline
14 Successful Execution: Non-Performing Assets Continue to Decline NPAs down $71mm or 9% linked quarter, down $504mm or 40% from the peak in 1Q09 Improvement driven by lower inflow and higher resolutions Lower NPL inflows in 2Q11 reflect continued portfolio stability NPL levels down 8% from 1Q11, do
Slide 16: Building Long-Term Earnings Power: Long-Term Targets
15 Building Long-Term Earnings Power: FHNC Bonefish - Long-Term Targets 2Q11 Consolidated 2Q11 Core1 Long-Term Targets ROA 0.74% 1.06% 1.25 - 1.45% NIM 3.20% 3.57% 3.50 - 4.00% NCO / Average Loans2 1.67% 0.68% 0.30 - 0.70% Fee Income as % of Revenue 52% 52% 40 - 50% Efficiency Ratio 85% 84% 60 - 65%
Slide 17: FHN Strategic Priorities
16 Optimize business mix for profitability and returns Replace runoff, low margin, Non-Strategic assets with higher margin, Regional Banking assets Focused on improving profitability in all lines of business Capital Markets continues to be strong contributor Improve productivity and efficiency Repla
Slide 18: Appendix
Appendix FiRst HORIZON ee
Slide 19: Liquidity and Capital Remain Strong
18 Liquidity and Capital Remain Strong Average core deposits in the Regional Bank up 2% linked quarter and 3% since 2Q10 to $12.9B Numbers may not add to total due to rounding. 1Source: SNL. Peer median includes top 50 publicly traded U.S. banks by total asset size at 1Q11. TCE/RWA is not adjusted f
Slide 20: Improving Productivity and Efficiency
19 Centralizing and streamlining consumer and business loan origination support Reducing span of control in support functions to align with benchmarks Consolidating back office functions Automating manual processes with upgraded technology Consolidating IT applications and systems Investing more tha
Slide 21: Credit Quality Summary by Portfolio
20 Credit Quality Summary by Portfolio As of 6/30/11; numbers may not add to total due to rounding.
Slide 22: Income CRE Portfolio
21 Income CRE Portfolio Construction 10% Land 10% Mini-Perm/ Construction 80% Other 10% Land 10% Industrial 14% Hospitality 11% Retail 21% Multi-Family 18% Office 16% Performance Collateral Type1 Loan Type1 Numbers may not add to total due to rounding. 1As of 6/30/11; NPLs as a percentage of each po
Slide 23: C&I Portfolio
22 C&I Portfolio All Other C&I 80% TRUPs 6% Consolidated C&I Portfolio C&I Loan Composition Bank Related Loans 3% Other Correspondent Banking 11% NPLs/Total Loans of 1.53% without TRUPs and Bank Related loans $7.2B portfolio, diversified by industry, managed in Regional Bank Includes loans to mortga
Slide 24: C&I Portfolio: TRUPS & Bank-Related Loans
23 C&I Portfolio: TRUPS & Bank-Related Loans 2Q11 TRUPs & Bank-Related Loans C&I w/o TRUPs & Bank-Related Loans Total C&I Portfolio PE Balances ($mm) $686 $6,494 $7,180 Reserves ($mm) $1151 $127 $206 Reserve Coverage 16.77%1 1.95% 2.87% NPL % 16.47% 1.53% 2.96% NCO %2 1.42% 0.23% 0.35% TRUPS and Ban
Slide 25: Home Equity: Performance and Characteristics
24 Home Equity: Performance and Characteristics Portfolio Characteristics Geographic Distribution 30+ Delinquency: Key Drivers Core Banking Customers TN 39% Other 41% CA 14% FL 3% 3% GA Numbers/Percentages may not add due to rounding. All charts and graphs include $649.2mm of restricted consumer rea
Slide 26: Consumer Real Estate Portfolio
25 Consumer Real Estate Portfolio 30+ Delinquency: Non-Strategic vs. Regional Net Charge-Offs Vintage Mix Non-Strategic Portfolio Run-Off2 1Source: McDash industry data as of May 2011. 2Channeling changed beginning March 2010 to be consistent with Accounting Segments. All charts and graphs include $
Slide 27: Mortgage Repurchases: Origination and Loan Characteristics
26 Mortgage Repurchases: Origination and Loan Characteristics ~$70B of originations from 2005 to 2008 Received ~$1.1B1 of GSE-related repurchase requests to date, or 1.6% of originations Represent 97% of all active repurchase/make whole requests in pipeline at 6/30/112 Private Securitizations3 ~$47B
Slide 28: Private Label Repurchase Risk Different than GSE Risk
27 Private Label Repurchase Risk Different than GSE Risk Resolution Representation General reps and warranties are not as comprehensive as GSE reps and warranties No specific representation and warranty on fraud in the origination Access Voting Rights Difficult for most investors to access loan file
Slide 29: Private Securitizations: Delinquencies and Cumulative Losses
28 Private Securitizations: Delinquencies and Cumulative Losses Jumbo 60+ Day Delinquencies Alt-A Cumulative Losses Alt-A 60+ Day Delinquencies Jumbo Cumulative Losses FHN Industry1 6% 13% 8% 12% Vintage Remaining Balance / Total 2004-2007 Current Jumbo and Alt-A Balance 6% 28% 19% 8% 11% 12% 8% 9%
Slide 30: Reconciliation to GAAP Financials
29 Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of net interest income adjusted for impact of FTE. That information is not presented according to generally accepted accounting principles (GAAP), and is reconciled to GAAP information below.
Slide 31: Reconciliation to GAAP Financials
30 Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of tangible assets, tangible common equity, tier 1 common capital, and various ratios using one or more of those measures. That information is not presented according to generally accepted accounting principles
Slide 32: Reconciliation to GAAP Financials
31 Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of net interest income, assets, net interest margin, net charge- offs, fee income, revenue, expense and various ratios using one or more of those measures. That information is not presented according to general
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