First Horizon Corporation · NYSE:FHN
First Horizon — Q1 2023 Earnings Presentation
25 slides from First Horizon's earnings presentation, Apr 18, 2023
Slide 1: First Horizon Reports First Quarter 2023 Results
First Horizon Corporation Reports First Quarter 2023 Net Income Available to Common Shareholders of $243 Million, or EPS of $0.43; $259 Million, or $0.45, on an Adjusted Basis* Pre-provision net revenue up 77% from the prior year and up 63% on an adjusted basis* ROTCE of 17.4% and adjusted ROTCE of
Slide 2: First Quarter 2023 versus Fourth Quarter 2022 Highlights
First Quarter 2023 versus Fourth Quarter 2022 Highlights • Total revenue of $859 million decreased $23 million and adjusted revenue of $863 million decreased $22 million, or 2%, primarily due to day count, seasonality and a 2 bp reduction in NIM. • Net interest income of $688 million decreased $21 m
Slide 3: Summary Results
SUMMARY RESULTS Quarterly, Unaudited 1Q23 Change vs. ($s in millions, except per share and balance sheet data) 1Q23 4Q22 1Q22 4Q22 1Q22 $/bp % $/bp % Income Statement Interest income - taxable equivalent1 $ 923 $ 860 $ 513 $ 63 7% $ 410 80 % Interest expense- taxable equivalent1 232 148 31 84 57 201
Slide 4: First Quarter 2023 versus Fourth Quarter 2022
First Quarter 2023 versus Fourth Quarter 2022 Net interest income Net interest income of $688 million decreased $21 million as the benefit of higher rates and loan balances was more than offset by higher funding costs and day count. Net interest margin of 3.87% decreased 2 basis points largely as th
Slide 5: Capital, Income Taxes and Forward-Looking Statements
Capital CET1 ratio of 10.4% in first quarter 2023 compared with 10.2% in fourth quarter 2022. Total capital ratio of 13.6% vs. 13.3% in fourth quarter 2022. Income taxes The first quarter 2023 effective tax rate of 22.7% compared with 19.2% in fourth quarter 2022. On an adjusted basis, the effective
Slide 6: Non-GAAP Measures and About First Horizon
equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; and risk-weighted assets, which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capita
Slide 7: Consolidated Income Statement
CONSOLIDATED INCOME STATEMENT Quarterly, Unaudited 1Q23 Change vs. ($s in millions, except per share data) 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $ % $ % Interest income - taxable equivalent1 $ 923 $ 860 $ 737 $ 586 $ 513 $ 63 7% $ 410 80 % Interest expense- taxable equivalent1 232 148 71 41 31 84 57 20
Slide 8: Adjusted Financial Data
ADJUSTED5 FINANCIAL DATA - SEE NOTABLE ITEMS ON PAGE 9 Quarterly, Unaudited 1Q23 Change vs. ($s in millions, except per share data) 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $ % $ % Net interest income (FTE)1 $ 691 $ 712 $ 666 $ 545 $ 482 $ (21) (3)% $ 209 43 % Adjusted noninterest income: Fixed income 39
Slide 9: Notable Items
NOTABLE ITEMS Quarterly, Unaudited (In millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Summary of Notable Items: Gain on sale of title services business $ — $ 1 $ 21 $ — $ — Gain related to equity securities investments — — 10 — 6 Gain on sale of mortgage servicing rights — — — 12 — IBKC merger/acquisition expen
Slide 10: Financial Ratios
FINANCIAL RATIOS Quarterly, Unaudited 1Q23 Change vs. 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 FINANCIAL RATIOS $/bp % $/bp % Net interest margin 3.87 % 3.89 % 3.49 % 2.74 % 2.37 % (2)bp 150 bp Return on average assets 1.32 % 1.35 % 1.29 % 0.82 % 0.90 % (3) 42 Adjusted return on average assets4 1.40 % 1.5
Slide 11: Period-End Balance Sheet
CONSOLIDATED PERIOD-END BALANCE SHEET Quarterly, Unaudited 1Q23 Change vs. (In millions) 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $ % $ % Assets: Loans and leases: Commercial, financial, and industrial (C&I) $ 32,172 $ 31,780 $ 31,620 $ 31,276 $ 30,798 $ 392 1% $ 1,374 4% Commercial real estate 13,397 13,
Slide 12: Average Balance Sheet
CONSOLIDATED AVERAGE BALANCE SHEET Quarterly, Unaudited 1Q23 Change vs. (In millions) 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $ % $ % Assets: Loans and leases: Commercial, financial, and industrial (C&I) $ 31,558 $ 31,562 $ 31,120 $ 30,963 $ 30,215 $ (4) —% $ 1,343 4% Commercial real estate 13,290 13,095
Slide 13: Net Interest Income and Average Balance Sheet: Yields and Rates
CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCE SHEET: YIELDS AND RATES Quarterly, Unaudited 1Q23 Change vs. 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 Income/ Income/ Income/ Income/ Income/ (In millions, except rates) Expense Rate Expense Rate Expense Rate Expense Rate Expense Rate Income/Expense Inc
Slide 14: Nonperforming Loans and Leases
CONSOLIDATED NONPERFORMING LOANS AND LEASES ("NPL") Quarterly, Unaudited As of 1Q23 change vs. (In millions, except ratio data) 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $ % $ % Nonperforming loans and leases Commercial, financial, and industrial (C&I) $ 204 $ 153 $ 116 $ 129 $ 153 $ 51 34 % $ 51 33 % Comm
Slide 15: Net Charge-Offs (Recoveries)
CONSOLIDATED NET CHARGE-OFFS (RECOVERIES) Quarterly, Unaudited As of 1Q23 change vs. (In millions, except ratio data) 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 Charge-off, Recoveries and Related Ratios $ % $ % Gross Charge-offs Commercial, financial, and industrial (C&I) $ 14 $ 24 $ 13 $ 12 $ 13 $ (10) (41
Slide 16: 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 1Q23 Change vs. (In millions) 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 Summary of Changes in the Components of the Allowance For Credit Losses $ % $ % Allowance for loan and lease losses - begi
Slide 17: Asset Quality Ratios - Allowance for Loan and Lease Losses
CONSOLIDATED ASSET QUALITY RATIOS - ALLOWANCE FOR LOAN AND LEASE LOSSES Quarterly, Unaudited As of 1Q23 4Q22 3Q22 2Q22 1Q22 Allowance for loans and lease losses to loans and leases Commercial, financial, and industrial (C&I) 1.01 % 0.97 % 0.93 % 0.88 % 0.93 % Commercial real estate 1.12 % 1.10 % 1.1
Slide 18: Regional Banking
REGIONAL BANKING Quarterly, Unaudited 1Q23 Change vs. 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $/bp % $/bp % Income Statement (millions) Net interest income $ 586 $ 544 $ 518 $ 465 $ 427 $ 42 8% $ 159 37 % Noninterest income 107 107 110 114 114 — — (7) (6) Total revenue 693 650 628 579 541 43 7 152 28 Non
Slide 19: Specialty Banking
SPECIALTY BANKING Quarterly, Unaudited 1Q23 Change vs. 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $/bp % $/bp % Income Statement (millions) Net interest income $ 125 $ 134 $ 138 $ 141 $ 144 $ (9) (6)% $ (19) (13)% Noninterest income 53 47 64 96 105 7 15 (52) (49) Total revenue 179 180 203 237 249 (2) (1) (7
Slide 20: Corporate Segment and Footnotes
CORPORATE Quarterly, Unaudited 1Q23 Change vs. 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $ % $ % Income Statement (millions) Net interest income/(expense) $ (24) $ 31 $ 6 $ (64) $ (93) $ (55) NM $ 69 74 % Noninterest income 11 21 39 (8) 9 (10) (47) 1 15 Total revenues (13) 52 45 (72) (83) (65) (125) 70 84
Slide 21: Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in millions, except per share data) 1Q23 4Q22 3Q22 2Q22 1Q22 Tangible Common Equity (Non-GAAP) (A) Total equity (GAAP) $ 8,895 $ 8,547 $ 8,283 $ 8,551 $ 8,696 Less: Noncontrolling interest (a) 295 295 295 295 295 Less: Preferred s
Slide 22: Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in millions, except per share data) 1Q23 4Q22 3Q22 2Q22 1Q22 Adjusted Diluted EPS Net income available to common shareholders ("NIAC") (GAAP) a $ 243 $ 258 $ 257 $ 166 $ 187 Plus Tax effected notable items (Non-GAAP) (a) 16 34 (5)
Slide 23: Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited (In millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Adjusted Noninterest Income as a % of Total Revenue Noninterest income (GAAP) k $ 171 $ 174 $ 213 $ 201 $ 229 Plus notable items (GAAP) (a) — (1) (32) (13) (6) Adjusted noninterest income (Non-GA
Slide 24: Non-GAAP to GAAP Reconciliation
CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in millions) 1Q23 vs 4Q22 NII/NIM Analysis NII % NIM 1Q23 Reported (FTE) 691 3.87 % Less: non-core items PPP coupon income and fees — — Loan Accretion 7 0.04 IBKC Premium Amortization (6) (0.03) 1Q23 Core (FTE) (Non-GAAP) $ 690 (3
Slide 25: 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