First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q1 2019 Earnings Presentation
26 slides from First Horizon's earnings presentation, Apr 16, 2019
Slide 1: First Quarter 2019 Earnings
First Horizon National Corporation First Quarter 2019 Earnings April 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: 1Q19 Highlights
1Q19 Highlights Delivering on Key Strategic Priorities Loan Growth Broad-based C&I Growth (All comparisons are 1Q19 vs 4Q18) 1Q19 EPS $0.31 +3% Deposit Growth Strong deposit gathering 2 in TN, Mid-Atlantic, & FL Adjusted EPS $0.35 – Revenue $436mm +6% Positive Revenues up, good Adjusted Revenu
Slide 4: Delivering on Key Strategic Priorities
Delivering on Key Strategic Priorities Dominate Tennessee • TN Deposit growth of 11% LQ annualized • TN Loan growth of 4% LQ annualized Profitably Grow Key Markets & Specialty Areas • Deposits up 15% in Mid-Atlantic and South Florida LQ annualized • Specialty lending growth of 14% LQ annualized Opti
Slide 5: Financial Results
FINANCIAL RESULTS 5
Slide 6: Financial Results
Financial Results Actual Adjusted • Strong quarterly average loan and deposit 1Q19 4Q18 1Q19 4Q18 LQ % LQ % growth of 1% and 2%, respectively Actual Actual Adjusted¹ Adjusted¹ $ in millions except per share data Change Change ￮ Regional Bank average loans up 1% LQ Net Interest Income $295 $303 -3% $
Slide 7: Total Loan Growth
Total Loan Growth Improved Portfolio Mix with Strong C&I Growth • Period-end loans up 7% LQ annualized • Continued growth in Regional Banking offsets run-off in non-strategic portfolios • Broad–based C&I growth across various industries • CRE balances down, driven by ~$220mm of pay-offs due to strat
Slide 8: Regional Banking Driving Profitable Loan Growth
Regional Banking Driving Profitable Loan Growth Broad-based Loan Growth Particularly in Key Markets and Specialty Lending • Regional Banking loan growth of 8% LQ annualized • Key markets grew 16% LQ annualized with increases in South Florida, Middle TN, Houston • Specialty areas grew 14% LQ annualiz
Slide 9: Total Deposits
Total Deposits Broad-based Core Deposit Growth, Significant Reduction in Market-indexed Deposits • Regional Banking growth of 14% LQ Strong PE LQ Deposit Growth in Key Markets (% is Annualized LQ) annualized with increases across key markets Tennessee Mid-Atlantic South FL • Market-indexed deposits
Slide 10: 1Q19 Net Interest Income & Net Interest Margin Trends
1Q19 Net Interest Income & Net Interest Margin Trends • NII down $8mm LQ on fewer days ($4mm) NII and NIM Linked-Quarter Change Drivers and less accretion ($4mm) ($ in millions) NII NIM 4Q18 - Reported $302.5 3.38% • NIM down 7bps LQ as strong deposit Less: 4Q18 CBF Loan Accretion -$13.7 -15bps grow
Slide 11: Fixed Income Provides Counter-Cyclicality
Fixed Income Provides Counter-Cyclicality • Federal Reserve commentary and outlook for rates favorably impacted 1Q19 activity • ADR of $729k up 48% LQ as all trading desks showed LQ growth • Pre-tax income increased from higher ADR in addition to the benefit of lower fixed expenses Fixed Income Reve
Slide 12: Optimizing The Expense Base
Optimizing The Expense Base Broad-based Expense Declines, Taking Further Efficiency Actions to Enable Reinvestment • Broad-based LQ decline across numerous categories • Deferred compensation net pre-tax impact of $1mm LQ; expense increase of $13mm offset by fee income increase of $12mm • Efficiency
Slide 13: Asset Quality
Asset Quality • In 1Q19, net charge-off (NCO) ratio1 at 7bps Asset Quality Highlights and down 10 bps LQ ￮ $5mm in charge-offs ($ in millions) 1Q18 2Q18 3Q18 4Q18 1Q19 Charge-offs ($8) ($10) ($9) ($18) ($11) ￮ 30-day delinquencies down 15% LQ Recoveries $7 $8 $8 $6 $6 • Provision increase due to loa
Slide 14: Balance Sheet Evolution Yields Lower Risk Model
Balance Sheet Evolution Yields Lower Risk Model • Commercial loan portfolio shifting to higher quality, Positive Commercial Credit Grade Migration with 42% of commercial loans qualifying as ($ are Total Ending Balance) $21B investment grade equivalent 3% PD 1-5 • High quality consumer portfolio with
Slide 15: Key Takeaways
Key Takeaways Delivering on Key Strategic Priorities & Controlling What We Can Control Controlling What We Can Control • Steady loan growth across markets and specialty areas • Strong deposit growth with momentum in key markets • Good expense discipline and taking additional efficiency actions to re
Slide 16: Net Interest Margin Outlook
Net Interest Margin Outlook Changes Driven by Negative Shift in Macro Rate Environment • Balance sheet trends remain strong with steady loan growth and deposit momentum in key markets • Prior NIM/NII outlook impacted by meaningful changes in market rates and expectations • Current expectation is NIM
Slide 17: 2019 Outlook: Delivering on Strategic Priorities
2019 Outlook: Delivering on Strategic Priorities 1Q19 2019 Outlook Commentary Reported Adjusted 1 1 Higher TCE due to higher investment ROTCE 14.2% 16.1% 16% +/- securities valuations ROA 1.03% 1.16%1 1.15% +/- Loan & Deposit Growth at 3-6% NIM 3.31% 3.31% 3.30% +/- Assumes no changes to FF rate in
Slide 18: Delivering on Strategic Priorities
Dominate Tennessee Profitably Grow Key Markets & Specialty Areas Delivering on Strategic Priorities Optimize The Expense Base Transform the Customer Experience Strong Risk Profile & Effective Capital Deployment 18
Slide 19: Appendix
APPENDIX N 19
Slide 20: 1Q19 Credit Quality Summary by Portfolio
1Q19 Credit Quality Summary by Portfolio Regional Banking Corporate5 Non-Strategic FHNC Commercial HE & Permanent Commercial HE & Permanent CRE Other1 Subtotal Other2 Total (C&I & Other) HELOC Mortgage (C&I & Other) HELOC Mortgage ($ in millions) Period End Loans $16,814 $3,947 $5,780 $439 $26,980 $
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% Specialty Energy Areas Correspondent 4% $2.4 $2.3 $2.1 4% Franchise Finance $2.1 $2.0 $1.9 $1.9 5% $1.8 Healthcare $1.7 $1.5 43% 9% Corporate 1Q19 Loans to Mortgage Co. 11% Asset-Bas
Slide 22: Consumer Portfolio & Non-Strategic Overview
Consumer Portfolio & Non-Strategic Overview HELOC Draw vs Repayment Balances Home Equity Portfolio In Draw In Repayment 65% $1.1B $0.4B 1Q19 6% 6% 7% 8% 8% 0-12 13-24 25-36 37-48 49-60 >60 Months Left in Draw Period Non-Strategic Consumer Real Estate Mortgage Repurchase Reserve $540mm $489mm ($ 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) Acquisition Expense ($43.2mm) 2Q Other Expense (Visa Shares) ($4.1mm) Acquisition Expense ($11.4mm) 3Q Visa B Share M
Slide 24: Capital Bank Acquisition & Restructuring Expenses
Capital Bank Acquisition & Restructuring Expenses Capital Bank Merger and Integration Expenses Restructuring Expenses ($ in millions) 1Q19 4Q18 1Q18 ($ in millions) 1Q19 Employee comp., incentives and benefits (a) $0.5 $1.2 $3.9 Employee comp., incentives and benefits $6.5 Occupancy (b) $0.1 $2.9 $
Slide 25: Reconciliation to GAAP Financials
Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of adjusted fee income, adjusted revenue, adjusted noninterest expense, adjusted pre-tax income, adjusted net income available to common, and adjusted earnings per share. That information is not presented accordin
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
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