First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q4 2018 Earnings Presentation
19 slides from First Horizon's earnings presentation, Jan 18, 2019
Slide 1: First Horizon National Corporation Fourth Quarter 2018 Earnings
First Horizon National Corporation Fourth Quarter 2018 Earnings January 18, 2019
Slide 2: Non-GAAP and forward-looking statements disclaimer
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. Annualized, pro forma, projected and es
Slide 3: 4Q18 & 2018 Highlights
4Q18 & 2018 Highlights Strong Fundamentals, Delivering Profitable Growth & High Returns Dominate Tennessee 2018 EPS • Deposit growth of 5% LQ • Loan growth of 1% LQ Reported $1.65 +154% 1 Adjusted $1.41 +27% Profitably grow key markets & specialty areas • Strong growth in Middle-TN, Mid-Atlantic, &
Slide 4: Financial Results
FINANCIAL RESULTS NY
Slide 5: Financial Results
Financial Results Actual Adjusted 4Q18 3Q18 4Q18 3Q18 • NII slightly down from lower accretion and Actual Actual LQ % Adjusted¹ Adjusted¹ LQ % loans to mortgage company seasonality $ in millions except per share data Change Change Net Interest Income $303 $306 -1% $303 $306 -1% • Fee income decline
Slide 6: Profitably Grow in Key Markets
Profitably Grow in Key Markets Momentum in Tennessee, Mid-Atlantic and South Florida • Total period-end deposit growth of 5% LQ ￮ Regional Bank growth of 6% with increases across all markets • Growth in new markets presents opportunity to increase customer deposits ￮ Average deposit cost in Mid-Atla
Slide 7: Driving Profitable Loan Growth
Driving Profitable Loan Growth Economic Profit Focus Driving Improved Loan Portfolio Mix • Period-end core commercial loans up 5% LQ ￮ Tennessee growth of 5% LQ ￮ Key market growth of 4% LQ in Middle Tennessee, Mid-Atlantic and South Florida • Growth in specialty areas such as correspondent, healthc
Slide 8: Net Interest Income & Net Interest Margin Trends
Net Interest Income & Net Interest Margin Trends • NIM declined LQ primarily due to higher cash Loan Betas Have Outpaced Deposit Betas balances resulting from strong deposit growth 6.00% 59% 38% 4.88% • Increase in market-index deposits due to equity 5.00% Loan vs. Deposit Beta Beta market volatilit
Slide 9: Optimizing The Expense Base
Optimizing The Expense Base • Achieved $53mm of merger cost saves in 2018 • LQ declines in FDIC expense, professional fees, employee compensation ￮ Significant decrease of $9mm in deferred compensation, largely driven by valuation declines based on equity market performance • Continued focus on posi
Slide 10: Asset Quality
Asset Quality • Annual net charge-off ratio1 at 6bps in 2018 Asset Quality Highlights ￮ NCO ratio1 0.17% in 4Q18 vs 0.15% in 4Q17 ($ in millions) 4Q17 1Q18 2Q18 3Q18 4Q18 ￮ In 4Q18, $12mm in charge-offs, primarily Charge-offs ($17) ($8) ($10) ($9) ($18) related to two C&I credits Recoveries $9 $7 $8
Slide 11: 2019 Outlook: Building from a Position of Strength
2019 Outlook: Building from a Position of Strength Efficiency ROTCE1 ROA NIM Ratio NCOs CET1 2018 Reported 20.3% 1.38% 3.45% 71% 6bps 9.8% Adjusted 17.7%1 1.19%1 3.45% 64%1 6bps 9.8% 2019 17% -18% 1.20% - 1.30% 3.40% - 3.50% 60% - 62% <10bps 9.5% - 10% 3% - 6% Jun 19 Fully Phased In 35% - 70% Key As
Slide 12: Evolving the Bonefish: Long-term Objectives
Top-Quartile Returns Better Risk Profile Evolving the Bonefish: Long-term Objectives Profitable Growth Enhanced Operating Leverage 12
Slide 13: Appendix
APPENDIX NY 13
Slide 14: Select C&I and CRE Portfolio Metrics
Select C&I and CRE Portfolio Metrics Regional Bank Average Commercial Loans C&I: Loans to Mortgage Companies 1% 2% Energy Specialty Areas Correspondent $2.4 4% 4% Franchise Finance $2.1 $2.1$2.1 $2.0 $2.0$1.9 $1.9 $1.8 $1.9 $1.9 5% Healthcare $1.5 41% Corporate 10% 4Q18 Loans to Mortage Co. Asset-Ba
Slide 15: Consumer Portfolio & Non-Strategic Overview
Consumer Portfolio & Non-Strategic Overview HELOC Draw vs Repayment Balances Home Equity Portfolio In Draw In Repayment 65% $1.1B $0.4B 4Q18 6% 6% 7% 8% 8% 0-12 13-24 25-36 37-48 49-60 >60 Months Left in Draw Period Non-Strategic Consumer Real Estate Mortgage Repurchase Reserve $594mm $540mm ($ in m
Slide 16: Notable Items – 2017 & 2018
Notable Items – 2017 & 2018 Pre-Tax Pre-Tax 2017 Amount1 2018 Amount1 Acquisition Expense ($31.4mm) 1Q None Gain on property sale $3.3mm Mortgage Repurchase Reserve Release $20.0mm Acquisition Expense ($43.2mm) Acquisition Expense ($6.4mm) 2Q Effective tax rate adjustment associated with reversal of
Slide 17: Capital Bank Acquisition Expenses
Capital Bank Acquisition Expenses ($ in millions) 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 Employee compensation, incentives and benefits (a) $1.2 $2.0 $2.5 $3.9 $16.8 $0.2 $- Occupancy (b) $2.9 $0.1 $2.2 $- $- $- $- Miscellaneous expense (c) $1.1 $1.4 $3.1 $2.0 $1.0 $0.1 $0.1 Professional fees (d) $3.1 $
Slide 18: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of adjusted fee income, adjusted revenue, adjusted noninterest expense, adjusted pre-tax income, adjusted net income available to common, and adjusted earnings per share. That information is not presented accordin
Slide 19: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of adjusted efficiency ratio, return on tangible common equity, adjusted return on tangible common equity, adjusted return on average assets, and adjusted return on equity. That information is not presented accord
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