First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q3 2019 Earnings Presentation
25 slides from First Horizon's earnings presentation, Oct 16, 2019
Slide 1: First Horizon National Corporation Third Quarter 2019 Earnings
First Horizon National Corporation Third Quarter 2019 Earnings October 16, 2019
Slide 2: Portions of this presentation use non-GAAP financial information. Each of those portions is so
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: 3Q19 Highlights
3Q19 Highlights Strong Results Driven by Revenue Growth, Balance Sheet Momentum, Expense Control Improved • EPS remains strong 3Q19 Earnings • Countercyclical businesses provide (All comparisons are 3Q19 vs 2Q19) significant earnings contribution EPS $0.35 —% Power Adjusted EPS1 $0.43 +2% • Revenues
Slide 4: Successful Execution of Strategic Priorities Delivering Solid Earnings
Successful Execution of Strategic Priorities Delivering Solid Earnings • Successful execution of strategic priorities driving earnings growth: ￮ Balance sheet management with positive mix shift ￮ Higher fees in Regional Bank & Fixed Income ￮ Countercyclical businesses provide offsets in a declining
Slide 5: Financial Results
FINANCIAL RESULTS 5
Slide 6: Financial Results
Financial Results Actual Adjusted¹ • Total revenue up 2% LQ 3Q19 2Q19 3Q19 2Q19 LQ % LQ % Actual Actual Adjusted¹ Adjusted¹ ￮ Strong fee income increase driven by higher $ in millions except per share data Change Change Net Interest Income $301 $304 -1% $301 $304 -1% revenues in Fixed Income; $994K
Slide 7: Total Loan Growth Accelerated in 3Q19
Total Loan Growth Accelerated in 3Q19 Specialty Areas and Key Markets Drive Growth • Diversified loan portfolio across strong economic markets • Total average loan growth of 10% YOY ￮ Specialty areas loan growth of 23% YOY ￮ Key markets loan growth of 7% YOY ￮ Includes $337mm decrease in non-strateg
Slide 8: Loan Growth Reflects Strategic Focus
Loan Growth Reflects Strategic Focus Broad-Based Loan & Deposit Growth with Strength in Specialty Areas • Strategic priority on developing quality relationships with profitable customers • Specialty businesses delivered 11% average loan growth with all areas up LQ ￮ Loans to mortgage companies (LMC)
Slide 9: Continued Positive Shift in Deposit Funding Mix
Continued Positive Shift in Deposit Funding Mix Demonstrating Customer Deposit Growth in Key Markets and Specialty Areas Total Avg. Deposits • Strategic focus on TN and key markets resulted $32.4B $30.8B $32.0B in solid deposit growth Market- $3.8B $4.1B $4.5B indexed $6.3B ￮ Average non-interest be
Slide 10: Loan Growth & Lower Deposit Costs Mitigate LIBOR Headwinds and Lower Accretion
Loan Growth & Lower Deposit Costs Mitigate LIBOR Headwinds and Lower Accretion • Core NII up largely due to NII and NIM Linked-Quarter Change Drivers specialty loan growth ($ in millions) NII NIM • Total deposit rate paid declined 2Q19 -Reported $303.6 3.34% 3bps LQ with a 14% deposit beta Less: 2Q1
Slide 11: Strong Quarter for Fixed Income
Strong Quarter for Fixed Income Complementary and Countercyclical Business Demonstrated in 3Q19 • Decline in interest rates, rate outlook, and market volatility favorably impacted 3Q19 activity • Fixed income product ADR of $994k up 15% LQ, 83% YOY • Efficiency focus positioned business for improved
Slide 12: Efficiency Actions Enable Reinvestment for Growth
Efficiency Actions Enable Reinvestment for Growth Efficiency Actions Support Investment into Customer-Facing Technology • Efficiency actions to position us for challenging rate environment and provide capacity to reinvest savings strategically • Sustainable cost saving actions taken in 2019 provide
Slide 13: Asset Quality
Asset Quality • Asset quality remains stable Asset Quality Highlights • In 3Q19, net charge-off (NCO) ratio1 at 19bps ($ in millions) 3Q18 4Q18 1Q19 2Q19 3Q19 Charge-offs ($9) ($18) ($11) ($12) ($24) ￮ Increase in charge-offs driven by two commercial credits Recoveries $8 $6 $6 $7 $10 ￮ NPL ratio at
Slide 14: Key Takeaways
Key Takeaways Delivering on Key Strategic Priorities & Controlling What We Can Control Controlling What We Can Control • Strong loan growth across markets and specialty areas • Solid core customer deposit growth with momentum in key markets • Good expense discipline with efficiency actions enabling
Slide 15: 2019 Outlook: Delivering on Strategic Priorities
2019 Outlook: Delivering on Strategic Priorities 3Q19 2019 Outlook Commentary Reported Adjusted1 Outlook improved due to stronger performance 1 14.5% ROTCE 17.7% 17% +/- across franchise Increased fee income and cost reductions 1.08% ROA 1.31% 1.25% +/- driving improved profitability Loan growth lik
Slide 16: Delivering on Strategic Priorities
Dominate Tennessee Profitably Grow Key Markets & Specialty Areas Delivering on Strategic Priorities Optimize The Expense Base Transform the Customer Experience Strong Risk Profile & Effective Capital Deployment 16
Slide 17: Appendix
APPENDIX 17
Slide 18: 3Q19 Credit Quality Summary by Portfolio
3Q19 Credit Quality Summary by Portfolio Regional Banking Corporate5 Non-Strategic FHNC Commercial HE & Permanent Commercial HE & Permanent CRE Other1 Subtotal Other2 Total (C&I & Other) HELOC Mortgage (C&I & Other) HELOC Mortgage ($ in millions) Period End Loans $19,962 $4,172 $5,759 $452 $30,345 $
Slide 19: Select C&I and CRE Portfolio Metrics
Select C&I and CRE Portfolio Metrics Regional Banking Average Commercial Loans C&I: Loans to Mortgage Companies 2% 2% Specialty Correspondent • 50% conventional conforming Areas Energy • 40% government insured 4% • 10% jumbo/other 4% Franchise Finance $5.0 5% Healthcare • 56% purchase/44% refi in 3Q
Slide 20: Consumer Portfolio & Non-Strategic Overview
Consumer Portfolio & Non-Strategic Overview HELOC Draw vs Repayment Balances Home Equity Portfolio In Draw In Repayment 67% $1.0B $0.4B 3Q19 8% 5% 6% 7% 7% 0-12 13-24 25-36 37-48 49-60 >60 Months Left in Draw Period Non-Strategic Consumer Real Estate Mortgage Repurchase Reserve $442mm ($ in millions
Slide 21: Notable Items – 2018 & 2019
Notable Items – 2018 & 2019 Pre-Tax Pre-Tax 2018 Amount 2019 Amount Acquisition Expense ($31.4mm) Restructuring ($12.2mm) 1Q Gain on property sale $3.3mm Acquisition Expense ($5.7mm) Restructuring ($18.7mm) Acquisition Expense ($43.2mm) Rebranding ($9.1mm) 2Q Acquisition Expense ($8.6mm) Other Expen
Slide 22: Expense: Acquisition, Restructuring, & Rebranding
Expense: Acquisition, Restructuring, & Rebranding Acquisition Expenses Restructuring Expenses ($ in millions) 3Q19 2Q19 3Q18 ($ in millions) 3Q19 2Q19 Legal and professional fees (a) $3.5 $4.5 $4.6 Legal and professional fees $6.5 $4.2 Employee comp., incentives, and benefits (b) $1.5 $1.5 $3.1 Empl
Slide 23: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of adjusted noninterest expense, adjusted pre-tax income, adjusted net income available to common, and adjusted earnings per share. That information is not presented according to generally accepted accounting prin
Slide 24: 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, and adjusted return on average assets. That information is not presented according to generally accepted a
Slide 25: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of adjusted noninterest expense per common share and adjusted earnings per share. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP informatio
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