First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q2 2016 Earnings Presentation
23 slides from First Horizon's earnings presentation, Jul 15, 2016
Slide 1: Financial supplement income statement table
Less: interest expense 21,112 21,590 20,968 20,125 20,390 (2 )% 4 % Provision for loan losses 4,000 3,000 1,000 1,000 2,000 33 % NM Noninterest income: Deposit transactions and cash management 26,991 26,837 28,951 28,911 28,430 1 % (5 )% Trust services and investment management 7,224 6,565 6,873 6,5
Slide 2: First Horizon National Corporation Second Quarter 2016 Earnings
First Horizon National Corporation Second Quarter 2016 Earnings July 15, 2016
Slide 3: Non-GAAP and forward-looking statements
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. Non - GAAP measures are reporte
Slide 4: Second Quarter 2016 Accomplishments
3 Second Quarter 2016 Accomplishments Strength in Core Businesses Focus on Positive Operating Leverage Capital Deployment Regional Bank: ▪ Average loan growth of 11%, led by increases in specialty lending areas ▪ Average core deposits up 7% ▪ Return on assets at 1.02% 1 ▪ Return on equity at 16% 1 F
Slide 5: Financial Results
FINANCIAL RESULTS VA FIRST HORIZON NATIONAL CORPORATION,
Slide 6: 2Q16 Consolidated Financial Results
2Q16 Consolidated Financial Results 5 Net Interest Income Fee Income Expense $ in millions Financial Results 2Q16 $176 Pre - Provision Net Revenue (PPNR) 1 $146 $227 $95 $57 2Q16 vs +6% +12% +4% +21% +12% 1Q16 $172 $134 $227 $78 $48 2Q15 $167 $130 $218 $79 $51 1Q16 +2% +8% * +22% +18% 2Q15 Actuals ▪
Slide 7: 2Q16 Segment Highlights
2Q16 Segment Highlights 6 Drivers and Impacts Net Income 1 $ in millions, except EPS 2Q16 Per Share Impact 2 Regional Banking Fixed Income Corporate 1 Non - Strategic Total 1 1Q16 $46 $7 $(15) $10 $48 2Q15 $46 $6 $(16) $15 $51 2Q16 $42 $12 $(19) $22 $57 $0.18 $0.05 $(0.08) $0.09 $0.24 ▪ Fixed income
Slide 8: Regional Banking Financial Results
Adjusted Expense 2 Regional Banking Financial Results Strong Year over Year Balance Sheet and NII Growth 7 Net Interest Income Fee Income Expense $ in millions Financial Results 2Q16 $178 $61 $164 2Q16 vs +7% - 7% +14% 1Q16 $172 $59 $145 2Q15 $166 $66 $144 1Q16 +3% +3% +13% 2Q15 Actuals ▪ Revenues u
Slide 9: Profitable Growth Opportunities: Regional Banking
8 Profitable Growth Opportunities: Regional Banking LQ – Linked Quarter. YOY - Year over Year. Numbers may not add to total due to rounding. 1 Other Specialty includes Correspondent, Corporate, Energy and Healthcare lending areas. $15.2 $15.9 $14.5 $14.8 $15.0 $15.3 $15.5 $15.8 $16.0 1Q16 ABL Retail
Slide 10: Restaurant Franchise Loan Acquisition
Restaurant Franchise Loan Acquisition 9 ▪ Agreed to acquire $637mm of restaurant franchise loans in Southeast and Southwest ▪ Acquisition creates strategically compelling specialty restaurant franchise lending area with ~$800mm of outstanding loans at close ▪ Estimated NII impact of ~$4 - 6mm quarte
Slide 11: Fixed Income - FTN Financial
Fixed Income - FTN Financial Solid Financial Results with Strong Revenue Growth 2Q16 Daily Fixed Income Product Revenue ▪ Fixed income product ADR at $1.1mm in 2Q16, up 15% LQ and up 48% YOY ▪ Fixed income ADR increase driven by rate volatility as well as a decline in rates ▪ Broad - based increases
Slide 12: Consolidated Net Interest Income and Net Interest Margin
Increased Commercial Loans Other 11 Net Interest Income Sensitivity Impact 1 Consolidated Net Interest Income and Net Interest Margin Strong NII Growth and Margin Expansion, Asset Sensitivity Moderating +2.5% +$16mm +3.8% +$25mm +1.5% +$11mm +2.9% +$21mm 0% 1% 2% 3% 4% +25bps +50bps 2Q15 2Q16 ▪ NII
Slide 13: Asset Quality Trends Show Improvement
12 Allowance to Loans Ratio by Segment 1.31% 1.26% 1.19% 1.16% 1.07% 0.91% 0.89% 0.88% 0.92% 0.88% 3.91% 3.83% 3.60% 3.19% 2.97% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2Q15 3Q15 4Q15 1Q16 2Q16 Consolidated Regional Banking Non-Strategic Net Charge - Offs Asset Quality Trends Show Improvement 0.00% 0.13% 0.25
Slide 14: Long-Term Targets: Bonefish Targets
13 2Q16 Consolidated Long - Term Targets ROTCE 1 11.1% 15.0%+ ROA 1 0.91% 1.10 – 1.30% CET1 2 10.1% 8.0 – 9.0% NIM 1 2.92% 3.25 – 3.50% NCO / Average Loans 1 0.19% 0.20 - 0.60% Fee Income / Revenue 45% 40 - 50% Efficiency Ratio 71% 60 - 65% 1 ROTCE, ROA, NIM, and NCO / Average Loans are annualized.
Slide 15: Building Blocks Provide Path to Bonefish Targets
14 Building Blocks Provide Path to Bonefish Targets Building a Foundation for Long - Term Earnings Power Chart illustrates a quantified path to long - term goals; it contains no forecasts. Current Return/ Earnings Power Increased Fixed Income Activity Target Bonefish Return/ Earnings Power Growth Op
Slide 16: Building a Foundation for Attractive Long-Term Earnings Power
15 Building a Foundation for Attractive Long - Term Earnings Power ▪ Proven execution capabilities ▪ Unique size, scope, and strengths ▪ Focused on efficiency, productivity, economic profitability, and growth opportunities ▪ Organizational alignment on the path to achieving long - term bonefish prof
Slide 17: Appendix
APPENDIX VA FIRST HORIZON NATIONAL CORPORATION, 16
Slide 18: Notable Items
Notable Items 17 2015 Pre - Tax Amount Employee Benefit Plan Amendment $8.3mm Retirement of Trust Preferred Debt $5.8mm 1Q 2Q 3Q Refer to the financial supplement for further variance trend analysis. 1 Pre - tax loss associated with resolution of a legal matter in the Fixed Income segment. 2 Pre - t
Slide 19: 2Q16 Credit Quality Summary by Portfolio
18 2Q16 Credit Quality Summary by Portfolio Numbers may not add to total due to rounding. Data as of 2Q16. NM - Not meaningful. 1 Credit card, Permanent Mortgage, and Other. 2 Credit card, OTC, and Other Consumer. 3 Net charge - offs are annualized. 4 Exercised clean - up calls on jumbo securitizati
Slide 20: Select C&I and CRE Portfolio Metrics
19 Select C&I and CRE Portfolio Metrics Data as of 2Q16. Numbers may not add to total due to rounding. ▪ $11.2B C&I portfolio , diversified by industry ▪ $2.0B CRE portfolio, diversified by geography, comprising 11% of period - end consolidated loans ▪ Commercial (C&I and CRE) net charge - offs were
Slide 21: Consumer Portfolio Overview
20 Core Banking Customers TN 67% CA 6% VA 3% NC 3% GA 3% Other 19% Consumer Portfolio Overview $1.2 $0.7 $0.0 $0.5 $1.0 $1.5 $2.0 In Draw In Repayment HELOC Draw vs Repayment Balances Percent of Home Equity Portfolio: Months Left in Draw Period 17% 19% 9% 6% 6% 44% 0% 5% 10% 15% 20% 25% 30% 35% 40%
Slide 22: Mortgage Repurchase Reserve and Agency Update
($ in millions) 2Q15 3Q15 4Q15 1Q16 2Q16 Beginning Balance $116 $117 $115 $115 $114 Net Realized Losses $0 $(2) $(0) $(1) $(16) Provision $0 $0 $0 $0 $(31) Ending Balance $117 $115 $115 $114 $67 $0 $100 $200 2Q15 3Q15 4Q15 1Q16 2Q16 GSE New Requests Other New Requests Resolved Pipeline 21 Agency & N
Slide 23: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials 22 Slides in this presentation use non - GAAP information of return on tangible common equity and adjusted expense. That information is not presented according to generally accepted accounting principles (GAAP ) and is reconciled to GAAP information below. Numbers m
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