First Horizon Corporation · NYSE:FHN
First Horizon — Q3 2022 Earnings Presentation
27 slides from First Horizon's earnings presentation, Oct 18, 2022
Slide 1: First Horizon Reports Third Quarter 2022 Results
First Horizon Corporation Reports Third Quarter 2022 Net Income Available to Common Shareholders of $257 Million, or EPS of $0.45; $252 Million, or $0.44, on an Adjusted Basis* Pre-provision net revenue up 59% from the prior quarter and up 37% on an adjusted basis* ROTCE of 18.2% and adjusted ROTCE
Slide 2: Third Quarter 2022 Versus Second Quarter 2022 Highlights
Third Quarter 2022 Versus Second Quarter 2022 Highlights • Total revenue of $875 million increased $132 million and adjusted revenue of $846 million increased $113 million, or 15%, reflecting strength in net interest income. • Net interest income of $662 million increased $120 million, or 22%, despi
Slide 3: TD Transaction Regulatory Approval Status
– Public meeting with Fed and OCC completed August 18, 2022 – Regulatory approval process remains on track 3
Slide 4: Summary Results
SUMMARY RESULTS Quarterly, Unaudited 3Q22 Change vs. ($s in millions, except per share and balance sheet data) 3Q22 2Q22 3Q21 2Q22 3Q21 $/bp % $/bp % Income Statement Interest income - taxable equivalent1 $ 737 $ 586 $ 536 $ 151 26 % $ 201 38 % Interest expense- taxable equivalent1 71 41 41 30 73 30
Slide 5: Third Quarter 2022 versus Second Quarter 2022
Third Quarter 2022 versus Second Quarter 2022 Net interest income Net interest income of $662 million increased $120 million despite a $6 million reduction tied to net merger- related and PPP benefits. Core net interest income increased $127 million as the benefit of higher rates, loan balances and
Slide 6: Capital, Income Taxes and Forward-Looking Statements
Capital CET1 ratio of 9.9% in third quarter 2022 compared with 9.8% in second quarter 2022. Total capital ratio of 13.1% vs. 13.0% in second quarter 2022. Income taxes The third quarter 2022 effective tax rate of 22.6% compares with 21.3% in second quarter 2022. On an adjusted basis, the effective t
Slide 7: Non-GAAP Measures and About First Horizon
equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; and risk-weighted assets, which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capita
Slide 8: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT Quarterly, Unaudited 3Q22 Change vs. ($s in millions, except per share data) 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 $ % $ % Interest income - taxable equivalent1 $ 737 $ 586 $ 513 $ 534 $ 536 $ 151 26 % $ 201 38 % Interest expense- taxable equivalent1 71 41 31 33 41 30 73 3
Slide 9: Adjusted Financial Data
ADJUSTED5 FINANCIAL DATA - SEE NOTABLE ITEMS ON PAGE 10 Quarterly, Unaudited 3Q22 Change vs. ($s in millions, except per share data) 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 $ % $ % Net interest income (FTE)1 $ 666 $ 545 $ 482 $ 502 $ 495 $ 121 22 % $ 171 35 % Adjusted noninterest income: Fixed income 46
Slide 10: Notable Items
NOTABLE ITEMS Quarterly, Unaudited (In millions) 3Q22 2Q22 1Q22 4Q21 3Q21 Summary of Notable Items: Gain/(loss) on TRUPS redemption (other noninterest income) $ — $ — $ — $ (3) $ (23) IBKC Branch sale gain (other noninterest income) — — — 4 2 Gain on sale of title services business 21 — — — — Gain r
Slide 11: Financial Ratios
FINANCIAL RATIOS Quarterly, Unaudited 3Q22 Change vs. 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 FINANCIAL RATIOS $/bp % $/bp % Net interest margin 3.49 % 2.74 % 2.37 % 2.42 % 2.41 % 75 bp 108 bp Return on average assets 1.29 % 0.82 % 0.90 % 1.02 % 1.05 % 47 24 Adjusted return on average assets4 1.27 % 0.95
Slide 12: Consolidated Period-End Balance Sheet
CONSOLIDATED PERIOD-END BALANCE SHEET Quarterly, Unaudited 3Q22 Change vs. (In millions) 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 $ % $ % Assets: Loans and leases: Commercial, financial, and industrial (C&I) $ 31,620 $ 31,276 $ 30,798 $ 31,068 $ 31,516 $ 344 1% $ 104 —% Commercial real estate 13,021 12,94
Slide 13: Consolidated Average Balance Sheet
CONSOLIDATED AVERAGE BALANCE SHEET Quarterly, Unaudited 3Q22 Change vs. (In millions) 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 $ % $ % Assets: Loans and leases: Commercial, financial, and industrial (C&I) $ 31,120 $ 30,963 $ 30,215 $ 30,780 $ 31,477 $ 157 1% $ (357) (1)% Commercial real estate 12,926 12,6
Slide 14: Net Interest Income and Average Balance Sheet: Yields and Rates
CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCE SHEET: YIELDS AND RATES Quarterly, Unaudited 3Q22 Change vs. 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 Income/ Income/ Income/ Income/ Income/ (In millions, except rates) Expense Rate Expense Rate Expense Rate Expense Rate Expense Rate Income/Expense Inc
Slide 15: Nonperforming Loans and Leases
CONSOLIDATED NONPERFORMING LOANS AND LEASES ("NPL") Quarterly, Unaudited As of 3Q22 change vs. (In millions, except ratio data) 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 $ % $ % Nonperforming loans and leases Commercial, financial, and industrial (C&I) $ 116 $ 129 $ 153 $ 125 $ 144 $ (12) (10)% $ (27) (19)
Slide 16: Net Charge-Offs (Recoveries)
CONSOLIDATED NET CHARGE-OFFS (RECOVERIES) Quarterly, Unaudited As of 3Q22 change vs. (In millions, except ratio data) 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 Charge-off, Recoveries and Related Ratios $ % $ % Gross Charge-offs Commercial, financial, and industrial (C&I) $ 13 $ 12 $ 13 $ 5 $ 12 $ 1 5% $ 1
Slide 17: Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments
CONSOLIDATED ALLOWANCE FOR LOAN AND LEASE LOSSES AND RESERVE FOR UNFUNDED COMMITMENTS Quarterly, Unaudited As of 3Q22 Change vs. (In millions) 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 Summary of Changes in the Components of the Allowance For Credit Losses $ % $ % Allowance for loan and lease losses - begi
Slide 18: Asset Quality Ratios - Allowance for Loan and Lease Losses
CONSOLIDATED ASSET QUALITY RATIOS - ALLOWANCE FOR LOAN AND LEASE LOSSES Quarterly, Unaudited As of 3Q22 2Q22 1Q22 4Q21 3Q21 Allowance for loans and lease losses to loans and leases Commercial, financial, and industrial (C&I) 0.93 % 0.88 % 0.93 % 1.07 % 1.19 % Commercial real estate 1.14 % 1.09 % 1.2
Slide 19: Regional Banking
REGIONAL BANKING Quarterly, Unaudited 3Q22 Change vs. 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 $/bp % $/bp % Income Statement (millions) Net interest income $ 517 $ 465 $ 428 $ 449 $ 444 $ 52 11 % $ 73 16 % Noninterest income 110 114 114 115 113 (4) (4) (3) (3) Total revenue 627 579 541 564 557 48 8 70 13
Slide 20: Specialty Banking
SPECIALTY BANKING Quarterly, Unaudited 3Q22 Change vs. 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 $/bp % $/bp % Income Statement (millions) Net interest income $ 138 $ 141 $ 144 $ 154 $ 154 $ (3) (2)% $ (16) (10)% Noninterest income 64 96 105 120 142 (32) (33) (78) (55) Total revenue 202 237 250 274 295 (35
Slide 21: Corporate and Footnotes
CORPORATE Quarterly, Unaudited 3Q22 Change vs. 3Q22 2Q22 1Q22 4Q21 3Q21 2Q22 3Q21 $ % $ % Income Statement (millions) Net interest income/(expense) $ 7 $ (64) $ (93) $ (104) $ (106) $ 71 111 % $ 113 107 % Noninterest income 39 (8) 9 11 (8) 47 NM 47 NM Total revenues 45 (73) (84) (93) (114) 118 NM 15
Slide 22: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in millions, except per share data) 3Q22 2Q22 1Q22 4Q21 3Q21 Tangible Common Equity (Non-GAAP) (A) Total equity (GAAP) $ 8,283 $ 8,551 $ 8,696 $ 8,494 $ 8,533 Less: Noncontrolling interest (a) 295 295 295 295 295 Less: Preferred s
Slide 23: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited 3Q22 2Q22 1Q22 4Q21 3Q21 Notable Non- Notable Non- Notable Non- Notable Non- Notable Non- ($s in millions, except per share data) GAAP Items GAAP GAAP Items GAAP GAAP Items GAAP GAAP Items GAAP GAAP Items GAAP Interest income - FTE $
Slide 24: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in millions, except per share data) 3Q22 2Q22 1Q22 4Q21 3Q21 Adjusted Diluted EPS Net income available to common shareholders ("NIAC") (GAAP) a $ 257 $ 166 $ 187 $ 219 $ 224 Plus Tax effected notable items (Non-GAAP) (a) (5) 29 24
Slide 25: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited (In millions) 3Q22 2Q22 1Q22 4Q21 3Q21 Adjusted Noninterest Income as a % of Total Revenue Noninterest income (GAAP) k $ 213 $ 201 $ 229 $ 247 $ 247 Plus notable items (GAAP) (a) (32) (13) (6) — 22 Adjusted noninterest income (Non-GAA
Slide 26: Consolidated Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in millions) 3Q22 vs 2Q22 NII/NIM Analysis NII % NIM 3Q22 Reported (FTE) $ 666 3.49 Less: non-core items PPP coupon income and fees 2 — Loan Accretion 12 0.07 IBKC Premium Amortization (7) (0.04) 3Q22 Core (FTE) (Non-GAAP) $ 659 2
Slide 27: Glossary of Terms
GLOSSARY OF TERMS Common Equity Tier 1 Ratio: Ratio consisting of common equity adjusted for certain unrealized gains/(losses) on available-for-sale securities, less disallowed portions of goodwill, other intangibles, and deferred tax assets as well as certain other regulatory deductions divided by