First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q2 2019 Earnings Presentation
27 slides from First Horizon's earnings presentation, Jul 16, 2019
Slide 1: First Horizon National Corporation Second Quarter 2019 Earnings
First Horizon National Corporation Second Quarter 2019 Earnings July 16, 2019
Slide 2: Non-GAAP and forward-looking statements
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: 2Q19 Highlights
2Q19 Highlights Delivering Significant Earnings and Balance Sheet Growth Momentum Earnings Reported/Adjusted1 EPS Growth up 13% & 20% LQ, respectively (All comparisons are 2Q19 vs 1Q19) 2Q19 EPS $0.35 +13% Reported ROTCE1/ROA Adjusted EPS1 $0.42 +20% Strong at 15.1% and 1.11% Adjusted1 ROTCE1/ROA Re
Slide 4: Delivering on Key Strategic Priorities
Delivering on Key Strategic Priorities Dominate Tennessee • TN average loan and deposit growth of 1% LQ • Middle TN produced 2% average growth in loans and deposits LQ Profitably Grow Key Markets & Specialty Areas • Specialty average loan growth of 14% LQ • Average deposits grew 2% LQ in key markets
Slide 5: Financial Results
FINANCIAL RESULTS NY
Slide 6: Financial Results
Financial Results • EPS up 13% LQ, up 20% on adjusted1 basis Actual Adjusted¹ 2Q19 1Q19 2Q19 1Q19 LQ % LQ % Actual Actual Adjusted¹ Adjusted¹ • Strong quarterly average loan and core $ in millions except per share data Change Change customer deposit growth Net Interest Income $304 $295 +3% $304 $295
Slide 7: Successful Execution of Strategic Priorities Driving EPS Growth
Successful Execution of Strategic Priorities Driving EPS Growth • Successful execution of strategic priorities driving Reported EPS Growth Linked-Quarter earnings growth: +$0.07 ￮ Balance sheet growth in key markets and specialty areas $0.35 -$0.03 ￮ Higher fees in Regional Bank & Fixed Income $0.31
Slide 8: Total Loan Growth Accelerated in 2Q19
Total Loan Growth Accelerated in 2Q19 Specialty Areas and Key Markets Drive Growth • Momentum driven by capturing growth opportunities in key markets after Capital Bank conversion • Total average loan growth of 5% from 2Q18 to 2Q19 ￮ Specialty areas loan growth of 13% YOY ￮ Key markets loan growth o
Slide 9: Loan Growth Reflects Strategic Focus
Loan Growth Reflects Strategic Focus Broad-Based Loan & Deposit Growth with Strength in Specialty Areas • Strategic priority on enhancing full banking relationships with specialty customers • Specialty businesses delivered 14% average loan growth with all areas up LQ ￮ Loans to mortgage companies gr
Slide 10: Continued Deposit Momentum in 2Q19
Continued Deposit Momentum in 2Q19 Targeted Deposit Growth in Key Markets and Specialty Areas Achieved • Strategic focus on TN and key markets resulted Positive Shift in Deposit Funding Mix in solid deposit growth $32.5B $32.0B ￮ Emphasis in key markets produced LQ $30.7B $4.7B Market- -19% $3.8B av
Slide 11: Balance Sheet Management Enhances NIM & NII
Balance Sheet Management Enhances NIM & NII • Continued success in customer deposit NII and NIM Linked-Quarter Change Drivers growth to reduce reliance on wholesale NII NIM ($ in millions) funding 1Q19 - Reported $294.5 3.31% ￮ Total deposit rate paid declined 4bps LQ Less: 1Q19 CBF Loan Accretion -
Slide 12: Strong Quarter for Fixed Income
Strong Quarter for Fixed Income Complementary and Countercyclical Business Demonstrated in 2Q19 • Decline in interest rates and rate outlook favorably impacted 2Q19 activity • Fixed income product ADR of $866k up 19% LQ, 85% YOY with growth across multiple trading desks • Other product revenue in Fi
Slide 13: Improving Efficiency While Investing for Growth
Improving Efficiency While Investing for Growth Efficiency Actions Support Investment and Customer Experience Transformation • Efficiency actions to position us for challenging rate environment, and provide capacity to reinvest savings strategically ￮ Announced 22 branch closures, improved processes
Slide 14: Asset Quality
Asset Quality • In 2Q19, net charge-off (NCO) ratio1 at 7bps Asset Quality Highlights ￮ $4mm in charge-offs driven by one commercial credit in loans to mortgage ($ in millions) 2Q18 3Q18 4Q18 1Q19 2Q19 companies portfolio Charge-offs ($10) ($9) ($18) ($11) ($12) ￮ 30-day delinquencies down 8% LQ Rec
Slide 15: Balance Sheet Evolution Yields Lower Risk Model
Balance Sheet Evolution Yields Lower Risk Model • Commercial loan portfolio shifting to higher quality, Positive Commercial Credit Grade Migration with 42% of commercial loans qualifying as ($ are Total Ending Balance) $23B investment grade equivalent 3% PD 1-5 • High quality consumer portfolio with
Slide 16: Key Takeaways
Key Takeaways Delivering on Key Strategic Priorities & Controlling What We Can Control Controlling What We Can Control • Strong loan growth across markets and specialty areas • Solid core customer deposit growth with momentum in key markets • Good expense discipline and taking additional efficiency
Slide 17: 2019 Outlook: Delivering on Strategic Priorities
2019 Outlook: Delivering on Strategic Priorities 2Q19 Reported Adjusted 2019 Outlook Commentary Outlook improved due to stronger ROTCE1 15.1% 18.2%1 17% +/- performance across franchise Increased fee income and cost reductions ROA 1.11% 1.32%1 1.20% +/- driving improved profitability Loan & Deposit
Slide 18: Delivering on Strategic Priorities
Dominate Tennessee Profitably Grow Key Markets & Specialty Areas Delivering on Strategic Priorities Optimize The Expense Base Transform the Customer Experience Strong Risk Profile & Effective Capital Deployment 18
Slide 19: Appendix
APPENDIX NY 19
Slide 20: 2Q19 Credit Quality Summary by Portfolio
2Q19 Credit Quality Summary by Portfolio Regional Banking Corporate5 Non-Strategic FHNC Commercial HE & Permanent Commercial HE & Permanent CRE Other1 Subtotal Other2 Total ($ in millions) (C&I & Other) HELOC Mortgage (C&I & Other) HELOC Mortgage Period End Loans $18,710 $3,787 $5,773 $441 $28,711 $
Slide 21: 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% Correspondent • 50% conventional conforming Specialty Areas • 40% government insured Energy 4% • 10% jumbo/other 4% Franchise Finance $3.8 5% • 70% purchase/30% refi in 2Q19 Healthca
Slide 22: Consumer Portfolio & Non-Strategic Overview
Consumer Portfolio & Non-Strategic Overview HELOC Draw vs Repayment Balances Home Equity Portfolio In Draw In Repayment 66% $1.0B $0.4B 2Q19 5% 6% 7% 8% 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 $489mm $442mm ($ in m
Slide 23: 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 ($8.6mm) Other Expen
Slide 24: Expense Schedules
Expense Schedules Capital Bank Acquisition, Restructuring, & Rebranding Capital Bank Merger and Integration Expenses Restructuring Expenses ($ in millions) 2Q19 1Q19 2Q18 ($ in millions) 2Q19 1Q19 Employee comp., incentives and benefits (a) $0.4 $0.5 $2.5 Employee comp., incentives and benefits $2.6
Slide 25: 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 26: 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 27: 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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