First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q1 2011 Earnings Presentation
28 slides from First Horizon's earnings presentation, Apr 21, 2011
Slide 1: Business segment descriptions
Regional Banking - Traditional lending and deposit taking, investments, financial planning, trust services, asset management, cash management, and health savings accounts - Correspondent banking which provides credit, depository, and other banking related services to other financial institutions - F
Slide 2: First Horizon National Corporation First Quarter 2011 Earnings
1 First Horizon National Corporation First Quarter 2011 Earnings April 21, 2011
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. This presentation contains forward-lo
Slide 4: Strategic Progress in 1Q11
3 Strategic Progress in 1Q11 Solid Regional Banking Franchise Strong Capital Markets Business Strengthened Balance Sheet Strong Capital Position1 Ability to Execute Proactive on Asset Quality Refocusing on Core Businesses All data is 1Q11 compared to 4Q10 unless otherwise noted. 1Tier 1, Tier 1 Comm
Slide 5: Financial Results
Financial Results FiRst HORIZON
Slide 6: First Quarter 2011 Financial Highlights
5 First Quarter 2011 Financial Highlights Significant Items ($ Millions) Pre-Tax 4Q10 Impact 1Q11 1Q11 Comments Restructuring, Repositioning, and Efficiency Initiatives $(5.4) $(13.6) Includes $2.3mm of employee compensation expense associated with severance and $10.1mm goodwill write down related t
Slide 7: Consolidated Financial Results
6 Consolidated Financial Results Earnings per share of $0.15 after discontinued operations Net income available to common of $40mm Provision at $1mm Net charge-offs of $77mm, down 23% linked quarter and down 58% from 1Q10 $76mm reserve decrease Eighth consecutive quarter of lower provision expense a
Slide 8: First Quarter 2011 Segment Highlights
7 Regional Banking Capital Markets Corporate Non-Strategic First Quarter 2011 Segment Highlights 1Q11 Drivers / Impacts Repurchase provision of $37mm in 1Q11 vs. $44mm in 4Q10 $203 $(151) 1Q11 Revenue 1Q11 Expense $96 $(74) $13 $(21) $59 $(70) Core Business (subtotal) Total $311 $(245) $370 $(315) 4
Slide 9: Strong Balance Sheet and Net Interest Margin Trends
8 Strong Balance Sheet and Net Interest Margin Trends Average total assets at $24.6B in 1Q11 Period end Non-Strategic loans decreased $239mm or 4% from 4Q10 Consolidated average core deposits down 1% linked quarter, up 3% year over year Reflects run-off of higher-cost deposits associated with exit f
Slide 10: Expenses and Productivity & Efficiency Actions
1Q10 2Q10 3Q10 4Q10 1Q11 Regional Banking 157 154 156 153 151 Capital Markets 84 78 79 77 72 Corporate 20 12 19 19 21 Non-Strategic 77 93 89 81 70 338 337 343 330 315 9 Centralized and streamlined consumer and business loan origination support Reduce span of control in credit card, online banking an
Slide 11: Mortgage Repurchase Reserve and Requests
10 1Q10 2Q10 3Q10 4Q10 1Q11 2006 & Prior 0.09 0.1 0.12 0.12 0.12 2006 0.17 0.18 0.17 0.18 0.18 2007 0.6 0.55 0.52 0.47 0.48 2008 0.14 0.17 0.19 0.23 0.22 Numbers may not add due to rounding. 1As of 3.31.11. Based on UPB. The pipeline represents active investor claims and mortgage insurance (MI) canc
Slide 12: Asset Quality Overview
11 1Q10 2Q10 3Q10 4Q10 1Q11 Net Charge-Offs 182.4 132.8 111 100 77 Reserve Increase/ Decrease -52.9 -63 -61 -55 -76 Reserve % of Loans (right axis) 0.0483 0.0455 0.0422 0.0396 0.0369 $200mm Asset Quality Overview1 Peer Median FHN Consolidated FHN Regional Bank FHN Non-Strategic Reserves 0.0251 0.036
Slide 13: Non-Performing Assets
12 Non-Performing Assets NPAs down $18mm or 2% linked quarter, down $222mm or 21% year over year Improvement driven by lower inflow Lower NPL inflows in 1Q11 reflect continued portfolio stability NPL levels flat vs. 4Q10, down 22% since 1Q10 ORE balances declined from lower additions and continued d
Slide 14: Building Long-Term Earnings Power: Long-Term Targets
13 Building Long-Term Earnings Power: FHNC Bonefish - Long-Term Targets 1Q11 Consolidated 1Q11 Core1 Long-Term Targets ROA 0.71% 1.26% 1.25 - 1.45% NIM 3.22% 3.58% 3.50 - 4.00% NCO / Average Loans2 1.90% 1.00% 0.30 - 0.70% Fee Income as % of Revenue 53% 55% 40 - 50% Efficiency Ratio 85% 79% 60 - 65%
Slide 15: FHN Strategic Priorities
14 Optimize business mix for profitability and returns Improve productivity and efficiency Deploy excess capital smartly FHN Strategic Priorities Building a Foundation for Long-Term Earnings Power
Slide 16: Appendix
Appendix FiRsT HORIZON ee
Slide 17: Liquidity and Capital Remain Strong
16 Liquidity and Capital Remain Strong 3Q10 4Q10 1Q11 4Q10 Peer Median Tier 1 Common 0.1035 0.115 0.117 0.097 11.7% 11.5% 9.7% Redeemed $100mm of TRUPs at 8.07% rate Repurchased the warrants issued to the Treasury in 2008 Paid off $549mm of maturing Bank Notes Numbers may not add to total due to rou
Slide 18: Credit Quality Summary by Portfolio
17 Credit Quality Summary by Portfolio As of 3/31/11; numbers may not add to total due to rounding.
Slide 19: Income CRE Portfolio
18 Income CRE Portfolio Construction Land Mini-Perm/Non-Construction Property Type 0.12 0.1 0.78 Construction 12% Land 10% Mini-Perm/ Construction 78% 1Q10 2Q10 3Q10 4Q10 1Q11 30+ Delq. 0.0311 0.0131 0.0204 0.012 0.0112 Net Charge-Offs (ann.) 0.0437 0.0304 0.0196 0.0366 0.0223 NPLs/Total Loans 0.108
Slide 20: C&I Portfolio
19 1Q10 2Q10 3Q10 4Q10 1Q11 30+ Delq. 0.0102 0.0102 0.0068 0.0036 0.0046 NPLs/Total Loans 0.0286 0.0293 0.0334 0.0292 0.0313 Net Charge-Offs (Ann.) 0.0167 0.0116 0.0134 0.0079 0.0059 C&I Portfolio All Other C&I TRUPs Bank-Related Correspondent Banking Property Type 0.81 0.06 0.03 0.09 All Other C&I
Slide 21: C&I Portfolio: TRUPS & Bank-Related Loans
20 C&I Portfolio: TRUPS & Bank-Related Loans 1Q11 TRUPs & Bank-Related Loans C&I w/o TRUPs & Bank-Related Loans Total C&I Portfolio PE Balances ($mm) $688 $6,120 $6,808 Reserves ($mm) $1151 $141 $221 Reserve Coverage 16.72%1 2.31% 3.24% NPL % 13.58% 1.96% 3.13% NCO %2 NM 0.66% 0.59% TRUPS and Bank-R
Slide 22: Consumer Real Estate Portfolio
21 Consumer Real Estate Portfolio 1Q10 2Q10 3Q10 4Q10 1Q11 Regional Banking 4 3 5 6 7 Non-Strategic 41 37 41 37 28 Restricted 11 11 12 11 9 30+ Delinquency: Non-Strategic vs. Regional1 Net Charge-Offs Vintage Mix Non-Strategic Portfolio Run-Off3 1Source: McDash industry data as of February 2011. McD
Slide 23: Home Equity: Performance and Characteristics
>=740 720- 739 700- 719 660- 699 <660 FICO Score (Origination) 0.01062513 0.023482379 0.027634664 0.034616015 0.044983552 22 TN 0.37 CA 0.14 GA 0.03 FL 0.03 Other 0.44 Home Equity: Performance and Characteristics Portfolio Characteristics Geographic Distribution 30+ Delinquency: Key Drivers Core Ban
Slide 24: Private Label Repurchase Risk Different than GSE Risk
23 Private Label Repurchase Risk Different than GSE Risk Resolution Representation General reps and warranties are not as comprehensive as GSE reps and warranties No specific representation and warranty on fraud in the origination Access Voting Rights Difficult for investors to access loan files Sig
Slide 25: Mortgage Repurchases: Origination and Loan Characteristics
24 2004 2005 2006 2007 Alt-A Original Balance (~$20B) 2678581648 8966568925 6060323599 2252825121 Alt-A Remaining Balance (~$8B) 713102813 3634774787 2528874349 1167038706 Mortgage Repurchases: Origination and Loan Characteristics 2005 2006 2007 2008 FNMA ("Fannie") 14.1 11.4 12 2 FHLMC ("Freddie")
Slide 26: Reconciliation to GAAP Financials
25 Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of net interest income adjusted for impact of FTE. That information is not presented according to generally accepted accounting principles (GAAP), and is reconciled to GAAP information below.
Slide 27: Reconciliation to GAAP Financials
26 Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of tangible assets, tangible common equity, tier 1 common capital, and various ratios using one or more of those measures. That information is not presented according to generally accepted accounting principles
Slide 28: Reconciliation to GAAP Financials
27 Reconciliation to GAAP Financials Slides in this presentation use non-GAAP information of net interest income, assets, net interest margin, net charge- offs, fee income, revenue, expense and various ratios using one or more of those measures. That information is not presented according to general
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