First Horizon Corporation · NYSE:FHN
First Horizon — Investor Day (June 2023)
107 slides from First Horizon's investor day presentation, Jun 6, 2023
Slide 1: First Horizon Investor Day
PS = 20 Purpose driven (am) oF : = Client centered HORIZON Z Value focused —
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. Non-GAAP measures are
Slide 3: Committed to driving enhanced shareholder returns
Committed to driving enhanced shareholder returns Proven ability to deliver more consistent returns through the cycle Positioned for the Proven record Experienced team future • 159-year track record • Executive Management team • Strong capital position and with >25 years of average risk management m
Slide 4: Regional Banking
Regional Banking The Foundation of our Business
Slide 5: Strong foundation for success
Strong foundation for success Provide Capital + Counsel through advice-driven client engagement • 417 Banking Centers located across 12 higher growth states Who • Provide large bank capabilities with client-centric delivery of a community bank to ~1 million clients we are • Full relationship focus w
Slide 6: Regional banking model with history of success
Regional banking model with history of success Demonstrated pre-provision net revenue growth founded on a strong balance sheet Pre-provision net revenue1 Period-end loans Period-end deposits ($s in millions) ($s in billions) ($s in billions) $1,504 $41.6 $42.3 $67.7 $40.3 $37.9 $0.1 $61.6 $3.8 $1.0
Slide 7: Opportunity to grow with communities we serve
Opportunity to grow with communities we serve Well positioned in higher-growth markets to deliver strong results 2.6x 4.0x GDP growth vs population growth national average1 vs national average2 70+ new producers hired since January 2022, primarily in higher-growth markets Projected population CAGR T
Slide 8: Strong market share
Strong market share Our top MSAs are located in attractive southern markets Avg. Deposits Market Market % of Total Memphis, TN New Orleans, LA Nashville, TN Deposits Branches per Branch Rank Share FHN Franchise MSA ($Bn) (No.) ($MM) (No.) (%) (%) Memphis, TN 13.4 32 420 1 32.1 18.7 Miami, FL 7.8 28
Slide 9: Retaining and investing in talent
Retaining and investing in talent Strong retention and tenure of bankers results in high client retention and deeper relationships Stable leadership Experience at all levels Average tenure: 100% 99% retention of retention in top two Tellers 7 years Regional Presidents1 tiers across markets1 Relation
Slide 10: Client-centric strategy
Client-centric strategy Our client-centric approach is at the center of all we do and delivers long-lasting, balanced relationships Our approach The results Relationship focus and trusted advisor • People-led, technology enabled • Deliver Capital + Counsel via team-based expertise Strong retention a
Slide 11: Attractive deposit franchise
Attractive deposit franchise Well-diversified deposit base with strong client retention and good momentum Well positioned in higher- Diversified funding mix Stable client base growth markets 2/3rds of total deposits are in $0.5B MSAs where FHN has top 5 25% 26% market share $6.3B $23.0B $1.0B $0.6B
Slide 12: Higher-quality, diversified loan portfolio
Higher-quality, diversified loan portfolio There for clients’ personal and business needs across all life stages Geographically diversified portfolio High quality loan mix Serving clients across multiple segments Enterprises of $25-$500 million in Commercial annual sales, with a target of $50- $0.1B
Slide 13: Treasury & Wealth Management expertise
Treasury & Wealth Management expertise Teams partner with commercial bankers to deliver value for clients while driving fee income and deposit growth Treasury Management Wealth Management AUM/AUA Growth $138 million +18,000 ($s in billions) in fee income treasury management CAGR clients (1Q23 annual
Slide 14: Invested in communities
Invested in communities Commitment to continuously care for communities — through all economic cycles — has always been part of our strategy and embedded in our core values $23 million 24,585 hours served $857 million1 invested by First Horizon Foundations By 1,083 associates participating in 8,678
Slide 15: Sustainable and successful model
Sustainable and successful model Recognized by clients, associates and independent evaluators as a great place to bank and work BANK DIRECTOR 15
Slide 16: Specialty Banking
Specialty Banking Delivering Strong Risk-Adjusted Returns through Diversified, Well-Managed Businesses
Slide 17: Unique value proposition
Unique value proposition Diversification across eleven specialty verticals plus three dedicated countercyclical businesses provides unique value proposition • Deep industry experience creates value Specialty lending verticals for clients • Asset-Based Lending • International • Franchise Finance • Sy
Slide 18: Financial performance
Financial performance Pre-provision net revenue1 Period-end loans Period-end deposits ($s in millions) ($s in billions) ($s in billions) $706 $17.2 $16.3 $16.0 $16.3 $6.2 $647 $5.4 $4.5 $2.3 $2.1 $4.6 $425 $347 $429 $356 $3.7 $3.2 $119 $28 $11.8 $11.8 $13.7 $14.2 $281 $299 $309 $328 FY202 FY21 FY22
Slide 19: Specialty operational segmentation
Specialty operational segmentation Core lending verticals provide long-term accretive value to the bank, while countercyclical businesses provide greater upside opportunity in down cycles Period-end loans Revenue ($s in billions) ($s in millions) $17.2 $16.3 $16.0 $16.3 Countercyclical 31% 28% 14% 1
Slide 20: Core Specialty Lending
FIRST HORIZON. Core Specialty Lending INVESTOR DAY NON WO
Slide 21: Professional Commercial Real Estate
Professional Commercial Real Estate Provides development, acquisition, refinancing, and placement products and services to institutional grade real estate developers, funds, and REITs primarily in the Southern United States Professional Commercial Real Estate: Who we are Clients People Portfolio Ser
Slide 22: Asset-Based Lending
Asset-Based Lending Issues loans and lines of credit secured by receivables, inventory, finance contracts, and other similar assets to C&I and Specialty Finance companies to support their working capital needs Asset-Based Lending: Who we are Clients People Portfolio 170 C&I and specialty Relationshi
Slide 23: Franchise Finance
Franchise Finance Serves the new unit development, remodeling, acquisition, and refinancing needs of multi-unit restaurant and fitness owners Franchise Finance: Who we are Clients People Portfolio 92 leading multi-unit restaurant Dedicated team with an average of Diversified client base by brand, an
Slide 24: Specialty Countercyclical
FIRST HORIZON. Specialty Countercyclical INVESTOR DAY NON WO
Slide 25: Countercyclical businesses over time
Countercyclical businesses over time Complement the bank in various economic environments Countercyclical performance Mortgage Warehouse lending trends • Mortgage warehouse lending has continued to $201 $202 maintain strong market share through the down cycle $127 • Secondary mortgage sales have slo
Slide 26: Mortgage Warehouse Lending
Mortgage Warehouse Lending Provides lines of credit to independent residential mortgage banking companies to finance residential mortgage loans from closing to their eventual sale to the secondary market Mortgage Warehouse lending: Who we are Clients People Portfolio 272 independent residential Indu
Slide 27: FHN Financial
FHN Financial Provides fixed income sales & trading, investment advisory, interest rate derivatives and other services to financial institutions, municipalities and other institutional investors across the United States and internationally FHN Financial: Who we are Clients People Portfolio 4,300 act
Slide 28: Deposit growth upside strategy
Deposit growth upside strategy In addition to growing through acquiring business operating accounts with new and current clients in our lines of business, we also have targeted strategies for growing the deposit base Mortgage • Seek new escrow deposits from current clients Warehouse • Recapture laps
Slide 29: Why specialty?
Why specialty? Diversification across eleven specialty verticals plus three dedicated countercyclical businesses provides unique value proposition ✓ Deep industry experience adds value for clients ✓ Fewer, more focused competitors ✓ Nationwide footprint enables selectivity ✓ Strong credit profile ✓
Slide 30: Break
FIRST HORIZON. Break INVESTOR DAY NON WO
Slide 31: Disciplined Credit Culture
FIRST HORIZON. Disciplined Credit Culture INVESTOR DAY NON WO
Slide 32: Risk management at First Horizon
Risk management at First Horizon Prudent risk management is a priority across the organization Tone starts at the top Executive focus Risk management is everyone’s responsibility 32
Slide 33: Disciplined credit culture
Disciplined credit culture Higher quality portfolio, well positioned to continue to deliver strong results throughout the cycle ✓ Proven ability to deliver through the cycle: How we deliver these results: NCO (%) Client focus • Strong client relationships 0.42% • Trust and transparency 0.36% • Dedic
Slide 34: Strong credit quality
Strong credit quality Current credit quality is strong, as has historically been the case Non-performing loans (NPLs) Net charge-off ratio (NCO%) Allowance for credit losses (ACL)1 ($ in millions) ($ in millions) 272% $424 268% 244% $386 $316 $1,048 189% $275 $772 $800 $736 $162 0.72% 127% 0.66% 0.2
Slide 35: Diversification as a strength
Diversification as a strength Well diversified across segments, geographies, and industries Loans by category Balance 1Q23 ($ in billions) Balanced credit portfolio with <25% in CRE and CRE/Total Risk Based Capital ratio of 160%, well 23% below regulatory guidance levels ($13.4) Geographically diver
Slide 36: C&I diversification
C&I diversification C&I portfolio well diversified across industries and markets Presence in more than 20 industry sectors….. …. and geographically diverse ($ in billions) ($ in billions) Balance % of C&I Balance % of C&I Industry Sector State2 1Q23 portfolio 1Q23 portfolio Finance & Insurance $4.2
Slide 37: C&I credit quality
C&I credit quality Low net charge-offs over time and 97% of the portfolio is pass-rated Accruing past due, classified and non-accrual Net charge-offs (% of total C&I loans) ($ in millions) $120 0.36% 2.25% $53 $27 Net charge-offs $13 0.17% $12 NCO % 0.13% 1.74% 1.64% 0.04% 1.64% 0.04% 1.42% FY191 FY
Slide 38: CRE diversification
CRE diversification Well-diversified CRE portfolio in higher-growth markets CRE portfolio by property type CRE portfolio by collateral state Balance 1Q23 ($ in billions) State 1Q23 portfolio mix Florida 26% Texas 12% North Carolina 12% $13.4 Georgia 10% Tennessee 9% Louisiana 9% South Carolina 4% Al
Slide 39: CRE office portfolio by type and state
CRE office portfolio by type and state Medical Office portfolio accounts for 43% of the total office portfolio CRE office portfolio by type Distribution by collateral state1 Balance 1Q23 Non-Medical Office Medical Office ($ in billions) State $ in millions % $ in millions % $2.8 North Carolina $291
Slide 40: CRE non-medical office details
CRE non-medical office details Average loan size of $2.3 million - Loans over $5 million have a weighted LTV of 59% Total non-medical office portfolio 1Q23 Period-end loans By loan size Weighted average LTV: 59% ($ in billions) Average loan size: $2.3 million 28% 26% 25% $1.6 $0.5 Loan to 29% $1.1 v
Slide 41: CRE credit quality
CRE credit quality Low net charge-offs over time - 98% of the CRE portfolio is pass-rated Accruing past due, classified and non-accrual Net charge-offs (% of total CRE loans) ($ in millions) $1.7 0.04 $1.2 1.49% $0.7 0.01% $0.6 0.02 1.25% 0.02% Net charge-Offs 0.01% 0.00 0.00% NCO % 1.11% 1.07% -0.0
Slide 42: Consumer credit quality
Consumer credit quality Consumer credit portfolio, 94% of which is secured by real estate (RE), shows high FICOs and low LTVs Refreshed FICO® score: Loan to value (LTV): Distribution consumer & residential portfolio Distribution consumer & residential portfolio with RE collateral Balance 1Q23 Balanc
Slide 43: 2022 company-run stress test results
2022 company-run stress test results Results demonstrate strong ability to navigate the Fed CCAR Severely Adverse Scenario while maintaining capital levels well above regulatory minimums Federal Reserve CCAR severely adverse scenario Results as of August, 20221 Severe global recession with heightene
Slide 44: Positioned for continued success
Positioned for continued success Our credit culture, strong team and proven business model position us well for continued success Client- Credit relationship Teamwork Discipline culture focus 16 Average tenure of 100% Retention of Credit Credit Executives, Team Executives 1Q22 – with ~35 years of 1Q
Slide 45: Q&A Session
FIRST HORIZON. Q&A Session INVESTOR DAY NON WO
Slide 46: People Led, Technology Enabled
People Led, Technology Enabled
Slide 47: People led, technology enabled
People led, technology enabled Serving as the foundation of our company Recent events have highlighted our strengths Strong culture Relationships People Technology Led Enabled Client centric Agility Technology is a key enabler of our people Resilience and relationships 47
Slide 48: Context: people & platforms
Context: people & platforms We have continued investing in our people and platforms Successful 91% 90+% Merger integration of brands Successful and systems in Primary client retention unassisted logins February 2022 Associate retention 1Q22 – 1Q231 Consistently high associate value scores Continued
Slide 49: Executive team
Executive team Retained a strong, experienced executive team and added new talent Stable and experienced leadership 12 yrs Leadership team has strong banking background With over 25 years in banking on average, the Average tenure of Executive Executive Management Committee has a proven Management Co
Slide 50: Associate retention
Associate retention Associate retention has been relatively strong across the company and we have continued to hire new associates Associate retention 1Q22 – 1Q231 Average tenure New hires (years) Total 87% 9 Bankers2 86% 9 1,000+ new hires since IT & Ops 91% 12 January 2022 Corporate Support 88% 9
Slide 51: Associate engagement
Associate engagement Our associates are highly engaged and supported Culture Support & development Associate favorability of 83%, calculated across 18 metrics 1,000+ ~250,000 Associates engaged in Hours spent on learning and We outperform other companies on key Associate Resource Groups development
Slide 52: Associate incentive strategies
Associate incentive strategies We have invested in our people and aligned incentives Increased minimum wage Aligned incentives across Deployed comprehensive 33% since 2021 benefiting all roles: retention program2 23% of associates $20 100% $150 million Company-wide minimum wage Of associates now eli
Slide 53: Continuous improvement
Continuous improvement Significant improvements since 2020 by implementing high-impact technology initiatives ‘nCino’ for Next-gen core, New contact commercial loan digital, and servicing center IVR and Cyber program origination platform for agent platform enhancement completed in 8 VirtualBank mont
Slide 54: Future priorities
Future priorities Our focus is on building a resilient, efficient foundation that supports our relationship-focused business model and priorities Foundational elements - “Run the bank” Business enablement - “Change the bank” A Ensure business resiliency C Enable superior experiences Continue to buil
Slide 55: What it will take
What it will take In order to deliver, we plan to invest an additional ~$75 - $100 million in technology and talent ~$75 – $100 million in additional investment over the next 3 years 100% Upgrades, enhancements and development of +20% new, differentiating capabilities: Enable “Change 40 – C superior
Slide 56: Key takeaways
Key takeaways Expect to continue to invest to ensure we maintain a more resilient and efficient technology foundation to support our relationship-focused business model and priorities 60 A Ensure business resiliency $100 Major projects B Elevate technology delivery Up to C Enable superior experience
Slide 57: People led, technology enabled
People led, technology enabled Serving as the foundation of our company Our strengths Strong culture Relationships People Technology Led Enabled Client centric Agility Technology is a key enabler of our people Resilience and relationships 57
Slide 58: Client Engagement, Client Experience and Building the Brand
Client Engagement, Client Experience and Building the Brand
Slide 59: First Horizon brand journey
First Horizon brand journey Focused on ensuring a consistent brand voice and presence – internally and externally First Tennessee brand 2019 transitions to First Horizon Bank COVID 2020 COVID 2022 Expanded footprint 2023 59
Slide 60: Defining the brand internally
Defining the brand internally Our Purpose Our Values Our Action Help our clients unlock • Puts clients first Own moment their full potential with • Cares about people capital and counsel. • Commits to excellence in Listen I Understand I Deliver everything we do • Elevates equity • Fosters team succe
Slide 61: Defining the brand externally
Defining the brand externally ‘Let’s Find A Way’ award-winning campaign featuring real clients and bankers “[Brand building] returns are meaningful – and +6% +5% +1% measurable...on average, a 1- point gain in brand metrics such as awareness and Brand awareness1 Brand awareness1 Brand consideration2
Slide 62: Mack Wilbourn, Atlanta client
Mack Wilbourn, Atlanta client 62
Slide 63: Differentiation through the client experience
Differentiation through the client experience Our client-centric strategy strengthens client relationships while fostering revenue growth and enhanced market positioning Relationships Feedback & complaints Interactions “80% of companies that excel in customer experience outperform their competitors
Slide 64: With over 8.5M annual visitors, FirstHorizon.com is Our Biggest Banking Center
With over 8.5M annual visitors, FirstHorizon.com is Our Biggest Banking Center Significant performance increase since October 2022 launch: +2.2M +26% Customer experience improved through 7.2% Prospects & clients visiting 560% Increase in leads1 New website visitors faster page load times more pages
Slide 65: Performance Marketing: Driving business
Performance Marketing: Driving business Channels AWARENESS (Brand) Paid digital media mix INTEREST Paid digital media mix CDP Triggers personalization CDP Podcast Shop CONSIDERATION Paid media partnerships INTENT 2023 Highlights Business journal partnerships • 4X increase in marketing driven leads E
Slide 66: What's on the horizon
What’s on the horizon Well positioned to deliver on strategic priorities and commitments • Continue to enhance the First Horizon brand • Drive deposit growth Key priorities • Cultivate high-value Wealth and Private Client relationships • Commercial Banking and Treasury Management lead nurture • Prov
Slide 67: Break
FIRST HORIZON. Break INVESTOR DAY NON WO
Slide 68: Delivering Enhanced Shareholder Value
Delivering Enhanced Shareholder Value
Slide 69: Focused on delivering enhanced shareholder value
Focused on delivering enhanced shareholder value Targeting top-quartile performance to drive enhanced shareholder returns • Diversified business model with highly attractive geographic footprint provides opportunity to deliver outperformance through a variety of economic cycles • Strong balance shee
Slide 70: Diversified model delivers more consistent returns
Diversified model delivers more consistent returns Countercyclical and specialty businesses enhance consistency of revenue over a range of cycles 2017 – 1Q23 Adj. PPNR per share CAGR1,2 • Uniquely positioned to deliver more consistent revenue results through multiple cycles given benefit of counterc
Slide 71: Delivering more consistent return outperformance
Delivering more consistent return outperformance • ~5-year average ROTCE outperformed BKX median by ~75 basis points • ROAA outperformed BKX median by ~7 basis points since 2017 • Delivered more consistent ROAA and ROTCE with less volatility than the peer group • Built $262 million of tangible commo
Slide 72: Top-quartile performance across key metrics
Top-quartile performance across key metrics1 (%) CET1 Ratio2 BKX 13.8 12.5 12.3 11.4 11.3 10.8 10.2 10.1 10.0 9.9 9.9 9.6 9.3 9.3 9.2 9.1 9.1 Median: 8.5 9.9% Peer Peer Peer Peer FHN Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Pro Forma 6.60 NIM 4.22 4.04 3.87 3.57 3.40 3.33 3.3
Slide 73: Strong 1Q23 results highlight diversified business model
Strong 1Q23 results highlight diversified business model ✓ 11.3% pro forma CET1 ratio1 Strong capital position ✓ 430 bps above regulatory capital requirements ✓ CET1 ratio +140 bps above peer median ✓ Attractive interest rate profile - 66% floating rate loans Prudently managed balance sheet ✓ Largel
Slide 74: Demonstrated history of robust capital levels
Demonstrated history of robust capital levels Strong ability to navigate various economic cycles Capital ratios1,2 Capital Ratios1,2 14.5 % • Capital levels well above regulatory minimums 13.3 % 13.6 % 12.6 % 12.3 % • Strong pro forma CET1 ratio of 11.3% provides protection against 12.7% potential f
Slide 75: Strong capital levels
Strong capital levels Lower exposure to unrealized securities losses largely reflects small portfolio size and moderate effective duration • Strong CET1 ratio of 10.4% o Benefit of adjusted NIAC partially offset by a reduction tied to growth in loans and unfunded commitments, and common dividends •
Slide 76: Top tier capital levels
Top tier capital levels Provides flexibility to manage near-term risk with ability to return additional capital in the future Tangible Common Equity/Tangible Assets1,2,3 Total Capital Return Ratio4,5 TCE/TA1 8.2% 71% 6.5% 53% 76% 48% 32% 38% 34% Reflects impact of MOE Pro Forma BKX FY17 FY18 FY19 FY
Slide 77: Balance sheet well-positioned to navigate variability
Balance sheet well-positioned to navigate variability Provides confidence in our ability to continue to drive top-tier performance over medium term $73.9 billion period-end interest-earning assets1 • Asset-sensitivity profile reflects loan mix with 66% floating rate 27% • Expect ~$5.8 billion of fix
Slide 78: Prudently managed portfolio to support liquidity & IRR
Prudently managed portfolio to support liquidity & IRR2 Limited reinvestment of pandemic-related excess cash in FY21 and FY22 to limit duration risk Investment portfolio • 1Q23 securities portfolio ~13% of total assets vs. peer median of ~22%2 ($s in billions) $21.7 o 94% U.S. Government or Agency-b
Slide 79: 1Q23 earning-asset mix reflects more normalized profile
1Q23 earning-asset mix reflects more normalized profile Decision to hold pandemic-related excess cash at Fed reflects disciplined balance sheet management Period-end interest-earning assets1 ($s in billions) • Interest-earning assets decreased $3.4 billion, or 4%, from $82.6 YE20 driven by a $5.9 bi
Slide 80: Attractive deposit and pricing profile
Attractive deposit and pricing profile Quarter-to-date deposits increased through 5/31 driven by strong May Period-end deposit balances • QTD deposits up ~$0.4 billion ($s in billions) $74.9 $70.0 $63.5 o Net deposit growth of ~$1.5 billion in May reflects $61.4 $61.8 37% $60.3 positive momentum acr
Slide 81: Well-diversified and attractive deposit mix
Well-diversified and attractive deposit mix • Client-oriented cost-effective deposits from a diverse commercial and 1Q23 $61.4 billion deposits by state consumer client base AL, 3% TX, 3% LA, GA, 2% o Largely concentrated in the top states and MSAs ranked by NC, 12% AR, 2% 11% population growth in t
Slide 82: Asset sensitive balance sheet delivering strong results
Asset sensitive balance sheet delivering strong results TE NII and NIM Trends1 ($s in millions) $2,804 $2,405 $2,133 $2,006 • TE NII increased $671 million, or 31%, and NIM increased 101 bps to 3.87% from FY20 3.87% 2.86% 3.10% o Reflects benefit of higher short-term rates on floating 2.48% rate loa
Slide 83: Revenue trends reflect benefit of rising rates
Revenue trends reflect benefit of rising rates Higher NII more than offset decreases in countercyclical fixed income and mortgage banking fees • Fee income trends reflect impact of COVID-19 pandemic and rising rates on countercyclical businesses • July 2022 sale of the title business reduced annual
Slide 84: Disciplined expense management mindset
Disciplined expense management mindset Adjusted expense trends1,2 • Annualized expense down $51 million from FY20 ($s in millions) o Benefit of ~$200 million in annualized expense savings tied $1,903 $1,883 $1,852 $1,795 to IBKC merger 13% 11% 13% 15% o Efficiency initiatives helped to mitigate infl
Slide 85: FY23 Outlook
FY23 Outlook Earnings drivers FY22 Adjusted baseline1 FY23 Adjusted Comments expectations Average loans $56 billion Up 3% – 5% Growth rate moderating in 2H23 Assumes 0.25% rate cuts in November and December; Net Interest Income (TE) $2,405 million Up 6% – 9% cumulative interest-bearing deposit betas
Slide 86: 2Q23 Outlook
2Q23 Outlook Earnings drivers 1Q23 Adjusted baseline1 2Q23 Adjusted expectations Comments Net Interest Income (TE) $691 million Down 5% – 7% Assumes no incremental rate hikes; cumulative deposit beta reaches mid-40% Noninterest Income2 $171 million Flat to down 2% ADR below 1Q23 levels of $437k Noni
Slide 87: Focus on driving enhanced shareholder value
Focus on driving enhanced shareholder value ✓ 2017 – 1Q23 adjusted PPNR per share CAGR of 10.4% Deliver outperformance through a variety of ✓ Average 2017-1Q23 ROAA +7 bps above BKX median economic cycles ✓ ROTCE +75 bps above BKX peer median since FY17 ✓ Pro forma CET1 ratio +140 bps above BKX peer
Slide 88: Q&A Session
FIRST HORIZON. Q&A Session INVESTOR DAY NON WO
Slide 89: Appendix
FIRST HORIZON. Appendix INVESTOR DAY NON WO
Slide 90: 2022 company-run stress test results
2022 company-run stress test results Company-run stress test results demonstrate strong ability to navigate the Fed CCAR Severely Adverse Scenario while maintaining capital levels well above regulatory minimums Federal Reserve CCAR Severely Adverse Scenario Capital Fed-run CCAR Peers1 • Updated comp
Slide 91: 2022 company-run stress test results
2022 company-run stress test results Countercyclical businesses help First Horizon outperform peers in latest stress test Key Stress Test Ratios1 Fixed Income Contribution 6.4% $300 30% $250 25% $200 20% $150 15% 2.5% 2.1% 2.3% $100 10% $50 5% 0.2% $0 0% -1.1% Loan Loss PPNR Pre-tax Net Income Total
Slide 92: Actively managing balance sheet sensitivity
Actively managing balance sheet sensitivity Interest-rate sensitivity managed in part with interest rate hedges Loan repricing profile Balance sheet hedges Interest rate sensitivity ARMs 9% +100bps -100bps Swaps +5.7% -6.2% Fixed $60b 42% $5.2b Variable Floors 34% 57% change in next 12 months’ NII f
Slide 93: Our ESG strategy is supported by our people strategy
Our ESG strategy is supported by our people strategy Our “Here for Good” strategy is an instrumental foundation for our future success ESG framework guided by five interrelated pillars Our vision is to be an employer of choice, while fostering opportunity, development and effectiveness to win with t
Slide 94: Environmental Social Governance (ESG)
Environmental Social Governance (ESG) Five pillars help guide our decisions to achieve our “Here for Good” strategy Governance Associates Clients Communities Environment Serve clients Strengthen our Operate responsibly Invest in our extraordinarily well communities through and positively Lead with s
Slide 95: Key ESG Milestones (2021-2023)
Key ESG Milestones (2021-2023) Environmental Social Governance • Announced $50 million commitment to • Assigned ESG oversight to NCG committee • Calculated and reported Scope 1 &2 communities of the board of directors location-based GHG emissions using 2019 as baseline year • Launched enterprise-wid
Slide 96: Reconciliation to GAAP financials
Reconciliation to GAAP financials Adjusted pre-provision net revenue ("PPNR") per share (in millions except per share data) 2017 2018 2019 2020 2021 2022 1Q23 Net interest income (GAAP) $ 842 $ 1,220 $ 1,210 $ 1,662 $ 1,994 $ 2,392 $ 688 Noninterest income (GAAP) $ 490 $ 723 $ 654 $ 1,492 $ 1,076 $
Slide 97: Reconciliation to GAAP financials
Reconciliation to GAAP financials Adjusted Net Income ("NI") and Adjusted Return on Average Assets ("ROAA") (in millions) 2017 2018 2019 2020 2021 2022 1Q23 Net Income ("NI") (GAAP) $ 177 $ 557 $ 452 $ 857 $ 1,010 $ 912 $ 256 Plus Tax effected notable items (GAAP) (a) $ 112 $ (78) $ 90 $ (294) $ 179
Slide 98: Reconciliation to GAAP financials
Reconciliation to GAAP financials Return on Average Common Equity ("ROCE")/Return on Average Tangible Common Equity ("ROTCE")/Adjusted ROTCE (in millions) 2017 2018 2019 2020 2021 2022 1Q23 Net income available to common shareholders ("NAIC") (GAAP) $ 159 $ 539 $ 435 $ 822 $ 962 $ 868 $ 243 Plus Tax
Slide 99: Reconciliation to GAAP financials
Reconciliation to GAAP financials Tangible Common Equity to Tangible Assets ("TCE/TA") (Non-GAAP) and Proforma TCE/TA (in millions) 1Q22 1Q23 Tangible Common Equity (Non-GAAP) Total equity (GAAP) a $ 8,696 $ 8,895 Less: Noncontrolling interest (a) $ 295 $ 295 Less: Preferred stock (a) $ 1,014 $ 1,01
Slide 100: Reconciliation to GAAP financials
Reconciliation to GAAP financials Adjusted Efficiency Ratio and Adjusted Revenue – taxable-equivalent ("TE") Adjusted pre-provision net revenue ("PPNR") (in millions) 1Q22 1Q23 (in millions) 1Q22 1Q23 Noninterest expense (GAAP) a $ 493 $ 478 Net interest income (GAAP) $ 479 $ 688 Plus notable items
Slide 101: Reconciliation to GAAP financials
Reconciliation to GAAP financials (in millions) Legacy FHN Legacy IBKC FHN Combined historical net interest income - taxable 2020 equivalent (Non-GAAP) & Adjusted combined historical Combined revenue - taxable-equivalent (Non-GAAP) 1H20 1H20 2H20 (b) 2020 2021 2022 1Q23 2023 Annualized Net interest
Slide 102: Reconciliation to GAAP financials
Reconciliation to GAAP financials (in millions) Legacy FHN Legacy IBKC FHN Adjusted components of noninterest income 2020 2023 (Non-GAAP) 1H20 1H20 2H20 Combined (b) 2020 2021 2022 1Q23 Annualized Noninterest income (GAAP): Fixed income (GAAP) $ 208 $ - $ 215 $ 423 $ 423 $ 406 $ 205 $ 39 $ 158 Mortg
Slide 103: Reconciliation to GAAP financials
Reconciliation to GAAP financials (in millions) Legacy FHN Legacy IBKC FHN 2020 2023 Adjusted components of noninterest expense (Non-GAAP) 1H20 1H20 2H20 Combined (b) 2020 2021 2022 1Q23 Annualized Noninterest expense (GAAP): Total personnel expense (GAAP) $ 384 $ 211 $ 649 $ 1,243 $ 1,033 $ 1,210 $
Slide 104: Reconciliation to GAAP financials
Reconciliation to GAAP financials (in millions) Legacy FHN Legacy IBKC FHN 2020 2023 Adjusted Efficiency Ratio 1H20 1H20 2H20 Combined (b) 2020 2021 2022 1Q23 Annualized Noninterest expense (GAAP) a $623 $372 $1,095 $2,090 $1,718 $2,095 $1,953 $478 $1,938 Plus notable items (GAAP) (a) (20) (18) (150
Slide 105: Reconciliation to GAAP financials
Reconciliation to GAAP financials (in millions) Legacy Legacy FHN FHN IBKC 2020 Notable Items: Line Item 2017 2018 2019 2020 2021 2022 1Q22 1Q23 1H20 2H20 Combined (c) Purchase accounting gain (a) All other noninterest income $ - $ - $ - $ 533 $ (1) $ - $ - $ - $ - $ - $ 533 $ 533 Gain related to eq
Slide 106: Reconciliation to GAAP financials
Reconciliation to GAAP financials Regional Banking (a) Legacy Legacy Combined (in billions) FHN IBKC FHN (b) Combined Historical Deposit and Loan Growth 1Q20 1Q20 1Q20 1Q23 Growth Deposits $ 27.6 $ 24.8 $ 52.3 $ 57.2 9% Loans $ 17.8 $ 21.3 $ 39.0 $ 42.3 8% Legacy Legacy Combined (in millions) FHN IB
Slide 107: Reconciliation to GAAP financials
Reconciliation to GAAP financials Specialty Banking (a) Combined (in millions) Legacy FHN Legacy IBKC FHN FHN (b) 1Q23 Pre-provision net revenue ("PPNR") 1H20 1H20 2H20 2020 2021 2022 1Q23 Annualized CAGR Specialty Banking Total Revenue (GAAP) $ 468 $ 124 $ 684 $ 1,277 $ 1,217 $ 869 $ 179 $ 726 Noni