First Horizon Corporation · NYSE:FHN
First Horizon — First Horizon National — Q4 2010 Earnings Presentation
32 slides from First Horizon's earnings presentation, Jan 21, 2011
Slide 1: Segment descriptions: Regional Banking, Capital Markets, Corporate, Non-Strategic
Regional Banking - Traditional lending and deposit taking, investments, insurance services, 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 financ
Slide 2: First Horizon National Corporation Fourth Quarter 2010 Earnings
1 First Horizon National Corporation Fourth Quarter 2010 Earnings January 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 Accomplishments in 2010
3 Strategic Accomplishments in 2010 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 4Q10 compared to 4Q09 unless otherwise noted. 1Tier 1, Tier
Slide 5: Financial Results
ancial Results IRST HORIZON IATIONAL CORPORATION.
Slide 6: 4Q10 Financial Highlights
5 4Q10 Financial Highlights Significant Items ($ Millions) Change from 3Q10 to 4Q10 Comments TARP Repayment $(53.3) Amortization of the remaining discount related to the TARP preferred shares as a result of repayment in 4Q10 Decrease in Net Hedging Results $(24.8) Declined 78% from 3Q10, from $32mm
Slide 7: Consolidated Financial Results
6 Consolidated Financial Results Earnings per share of $(0.20) after discontinued operations and TARP dividend Net income available to common of $(49)mm $(63)mm impact of TARP CPP preferred $53.3mm remaining accretion related to CPP $9.9mm of dividend Provision at $45mm $55mm reserve decrease Sevent
Slide 8: Fourth Quarter 2010 Segment Highlights
7 Regional Banking Capital Markets Corporate Non-Strategic Fourth Quarter 2010 Segment Highlights 4Q10 Drivers / Impacts Repurchase provision of $44mm in 4Q10 vs. $49mm in 3Q10 $222 $(160) 4Q10 Revenue 4Q10 Expense $100 $(77) $24 $(19) $47 $(79) Core Business (subtotal) Total $346 $(256) $393 $(335)
Slide 9: Mortgage Repurchase-Related Expenses Driving Elevated Environmental Costs
8 8 Mortgage Repurchase-Related Expenses Driving Elevated Environmental Costs Pre-2006 2006 2007 2008 2009 % of repurchase requests 0.11 0.18 0.47 0.23 0 % of FHN originations by vintage 0.34 0.26 0.25 0.15 0 Numbers may not add due to rounding. 1Based on UPB. The pipeline represents active investor
Slide 10: Strong Balance Sheet and Net Interest Margin Trends
9 Strong Balance Sheet and Net Interest Margin Trends Period end total assets at $24.7B in 4Q10 Period end C&I loans flat from 3Q10 Period end Non-Strategic loans decreased $338mm or 6% from 3Q10 Consolidated average core deposits up 1% linked quarter to $14.8B Consolidated NIM down 5bps linked quar
Slide 11: Solid Pre-Tax Income in Core Business Segments
10 FHN Pre-Tax Income $400mm Regional Banking Capital Markets Corporate Core Businesses1 Non- Strategic Consolidated Solid Pre-Tax Income in Core Business Segments Core businesses' pre-tax income grew 76% from 2009 to 2010 Counter-cyclicality of regional banking and capital markets demonstrated as c
Slide 12: Asset Quality
Asset Quality 4 FIRST HORIZON 2 NATIONAL CORPORATION
Slide 13: Asset Quality Overview: Reserves and Net Charge-Offs
12 4Q09 1Q10 2Q10 3Q10 4Q10 Net Charge-Offs 182.9 182.4 132.8 111 100 Reserve Increase/ Decrease -47.9 -52.9 -63 -61 -55 Reserve % of Loans (right axis) 0.0495 0.0483 0.0455 0.0422 0.0396 $225mm Asset Quality Overview1 Peer Median FHN Consolidated FHN Regional Bank FHN Non-Strategic Reserves 0.026 0
Slide 14: Non-Performing Assets
13 Non-Performing Assets NPAs down $83mm or 9% linked quarter, down $215mm or 20% year over year Improvement driven by lower inflow and increase in resolutions and payments Lower NPL inflows in 4Q10 reflect continued portfolio stability NPL levels down 9% vs. 3Q10, down 23% since 4Q09 ORE balances d
Slide 15: Asset Quality: Portfolio Highlights
14 Asset Quality: Portfolio Highlights C&I portfolio showing improved trends with fewer downgrades and more upgrades Income CRE headwinds seem to be somewhat moderating from less downgrade activity Home equity trends remain relatively stable 4Q09 1Q10 2Q10 3Q10 4Q10 30+ Delq. 0.0313 0.0311 0.0131 0.
Slide 16: 2011 Outlook and Credit Expectations and Risks Summary
15 2011 Outlook (assuming stable/improving economy): C&I continues to stabilize, but with continued quarter to quarter fluctuations Income CRE remains stressed from valuation risk from renewals Home Equity remains stable but highly dependent upon the economy and unemployment Residential CRE and Perm
Slide 17: Summary
16 Summary Strategic Actions in 2010: Credit quality improved Core Businesses' performance remains solid: Regional Banking benefited from lower provision and strong net interest margin Capital Markets remained a strong contributor to fee income Continued wind-down of Non-Strategic loan portfolio Rep
Slide 18: Appendix
Appendix IRST HORIZON IATIONAL CORPORATION,
Slide 19: Segment Structure Reflects Strategic Focus
18 Segment Structure Reflects Strategic Focus FIRST HORIZON NATIONAL CORPORATION Capital Markets Regional Banking Commercial Business Banking PC/Wealth Management Corporate Banking CRE Retail (TN Origination) Correspondent Banking Fixed Income Other Products Corporate Corporate Functions Investment
Slide 20: Bonefish Long Term Targets
19 Bonefish Long Term Targets
Slide 21: Liquidity and Capital Remain Strong
20 Liquidity and Capital Remain Strong 1Q10 2Q10 3Q10 4Q10 3Q10 Peer Median Tier 1 Common 0.0991 0.101 0.1035 0.115 0.094 10.1% 11.5% 9.4% Completed common stock offering of 26mm shares for net proceeds of $263mm Repurchased $867mm of TARP preferred shares Completed $500mm senior debt offering Fixed
Slide 22: Credit Quality Summary by Portfolio
21 Credit Quality Summary by Portfolio As of 12/31/10; numbers may not add to total due to rounding.
Slide 23: Income CRE Portfolio: Stress Likely to Remain in 2011
22 Income CRE Portfolio: Stress Likely to Remain in 2011 Construction Land Mini-Perm/Non-Construction Property Type 0.14 0.11 0.76 Construction 14% Land 11% Mini-Perm/ Construction 76% 4Q09 1Q10 2Q10 3Q10 4Q10 30+ Delq. 0.0313 0.0311 0.0131 0.0204 0.012 Net Charge-Offs (ann.) 0.0613 0.0437 0.0304 0.
Slide 24: C&I Portfolio: Core Stable; TRUPS, Bank-Related Loans Stressed
23 4Q09 1Q10 2Q10 3Q10 4Q10 30+ Delq. 0.0096 0.0102 0.0102 0.0068 0.0036 NPLs/Total Loans 0.019 0.0286 0.0293 0.0334 0.0292 Net Charge-Offs (Ann.) 0.0121 0.0167 0.0116 0.0134 0.0079 C&I Portfolio: Core Stable; TRUPS, Bank-Related Loans Stressed All Other C&I TRUPs Bank-Related Correspondent Banking
Slide 25: C&I Portfolio: TRUPS & Bank-Related Loans
24 C&I Portfolio: TRUPS & Bank-Related Loans 4Q10 TRUPs & Bank-Related Loans C&I w/o TRUPs & Bank-Related Loans Total C&I Portfolio PE Balances ($mm) $695 $6,643 $7,338 Reserves ($mm) $1151 $160 $239 Reserve Coverage 16.54%1 2.41% 3.26% NPL % 11.54% 2.01% 2.92% NCO %2 NM 0.90% 0.79% TRUPS and Bank-R
Slide 26: Consumer Real Estate Portfolio
25 Consumer Real Estate Portfolio 4Q09 1Q10 2Q10 3Q10 4Q10 Regional Banking 6 4 3 5 6 Non-Strategic 46 41 37 41 37 Restricted 0 10 10 11 11 30+ Delinquency: Non-Strategic vs. Regional1 Net Charge-Offs Vintage Mix Non-Strategic Portfolio Run-Off3 1Source: McDash industry data as of October 2010. McDa
Slide 27: Home Equity - Performance and Characteristics
26 TN 0.34 CA 0.15 GA 0.03 FL 0.03 Other 0.48 Home Equity - Performance and Characteristics Portfolio Characteristics Geographic Distribution 30+ Delinquency: Key Drivers Core Banking Customers TN 37% Other 42% CA 14% FL 3% 3% GA Numbers/Percentages may not add due to rounding. All charts and graphs
Slide 28: Non-Strategic Portfolios: Perm Mortgage & Res CRE
27 Non-Strategic Portfolios: Perm Mortgage & Res CRE 1Perm Mortgage reflects consolidated asset quality trends. $13.5mm of losses related to an acceleration of net charge-off recognition in 1Q10. Permanent Mortgage Non-Strategic Res CRE Permanent Mortgage portfolio Net charge-offs down $5mm linked q
Slide 29: Private Label Repurchase Risk Different than GSE Risk
28 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 30: Mortgage Repurchases: Origination and Loan Characteristics
29 2004 2005 2006 2007 Alt-A Original Balance (~$20B) 2678581648 8966568925 6060323599 2252825121 Alt-A Remaining Balance (~$8B) 727153810 3668497895 2630812905 1216105642 Mortgage Repurchases: Origination and Loan Characteristics 2005 2006 2007 2008 FNMA ("Fannie") 14.1 11.4 12 2 FHLMC ("Freddie")
Slide 31: Reconciliation to GAAP Financials
30 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 32: Reconciliation to GAAP Financials
31 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
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