Another strong quarter for First Horizon
October 14 2016 - 6:45AM
Positive momentum continued in the third quarter for First Horizon
National Corp.’s (NYSE:FHN) First Tennessee regional bank and FTN
Financial, the fixed income business. The company saw strong
growth across multiple businesses, with loans, deposits and average
daily revenue from fixed income products all up from the same
quarter last year. Efficiency improved, and asset quality
remains strong.
“This was a very good quarter. We clearly demonstrated our
ability to grow and build sustained profitability at First
Horizon,” said Bryan Jordan, First Horizon’s chairman and
CEO. “Our people generated strong growth across our
businesses, with loans up 18 percent at First Tennessee and fixed
income average daily revenue up 37 percent at FTN Financial
compared to the same period last year. We remain focused on
creating deep relationships with our customers and creating value
to build our company for long-term success.”
|
|
Third Quarter
Financial Highlights and Accomplishments (all comparisons
vs 3Q15) |
|
Diluted EPS
$0.27 |
|
ROA 0.97%* |
|
ROE / ROTCE* 10.8% /
11.9% |
|
CET19.8%** |
|
|
|
Regional Bank |
|
Average loan growth of 18%
Average core deposits up 7% Return on assets (ROA) at
1.47%* Return on equity (ROE) at 24%* |
|
|
Fixed Income |
|
Fixed income product average daily
revenue (ADR) at $922,000, up 37% Continued fee income growth ROA
at 1.63%* ROE at 27%* |
|
|
Consolidated |
|
Net income up 7% and earnings per
share (EPS) up 8% Revenues up 16%; expenses up 8%; efficiency ratio
improved to 70% Net interest income (NII) up 13%; net interest
margin (NIM) up 11 basis points to 2.96% Average loans up 12%;
average core deposits up 11% |
|
|
|
Asset Quality |
|
Trends remain favorable;
nonperforming assets (NPAs) down 20% Net charge-offs (NCOs)
declined to annualized 0.05% of average loans Consolidated
reserve-to-loans ratio at 1.03% |
|
|
|
Capital Deployment |
|
Repurchased $7.1 million, or ~468,000
common shares Completed acquisition of ~$537 million in franchise
finance loans |
|
|
|
* Annualized. Business segment revenue, expense, asset and
equity levels reflect those that are specifically identifiable or
that are allocated based on an internal allocation method. ROTCE
(return on tangible common equity) is a non-GAAP financial measure
reconciled to ROE in the Non-GAAP to GAAP Reconciliation table
below. |
|
** Current quarter estimate |
|
Consolidated Summary Results |
|
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|
|
|
|
|
|
|
|
Quarterly,
Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
3Q16 Changes vs. |
|
|
(Dollars in thousands, except per share data) |
|
3Q16 |
|
|
|
2Q16 |
|
|
|
3Q15 |
|
|
2Q16 |
|
3Q15 |
|
|
Income Statement
Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income |
$ |
185,195 |
|
|
$ |
176,264 |
|
|
$ |
163,562 |
|
|
|
5 |
|
% |
|
|
13 |
|
% |
|
|
Noninterest
income |
|
148,745 |
|
|
|
145,415 |
|
|
|
125,448 |
|
|
|
2 |
|
% |
|
|
19 |
|
% |
|
|
Securities gains/(losses), net |
|
(200 |
) |
|
|
99 |
|
|
|
(345 |
) |
|
|
NM |
|
|
|
|
42 |
|
% |
|
|
|
Total
revenue |
|
333,740 |
|
|
|
321,778 |
|
|
|
288,665 |
|
|
|
4 |
|
% |
|
|
16 |
|
% |
|
|
Noninterest expense |
|
233,558 |
|
|
|
226,822 |
|
|
|
215,436 |
|
|
|
3 |
|
% |
|
|
8 |
|
% |
|
|
Provision for loan losses |
|
4,000 |
|
|
|
4,000 |
|
|
|
1,000 |
|
|
|
* |
|
|
|
|
NM |
|
|
|
|
Income before income taxes |
|
96,182 |
|
|
|
90,956 |
|
|
|
72,229 |
|
|
|
6 |
|
% |
|
|
33 |
|
% |
|
|
Provision for income taxes |
|
28,547 |
|
|
|
30,016 |
|
|
|
8,897 |
|
|
|
(5 |
) |
% |
|
|
NM |
|
|
|
|
Net income |
|
67,635 |
|
|
|
60,940 |
|
|
|
63,332 |
|
|
|
11 |
|
% |
|
|
7 |
|
% |
|
|
Net income attributable to noncontrolling
interest |
|
2,883 |
|
|
|
2,852 |
|
|
|
2,977 |
|
|
|
1 |
|
% |
|
|
(3 |
) |
% |
|
|
Net income attributable to controlling interest |
|
64,752 |
|
|
|
58,088 |
|
|
|
60,355 |
|
|
|
11 |
|
% |
|
|
7 |
|
% |
|
|
Preferred stock dividends |
|
1,550 |
|
|
|
1,550 |
|
|
|
1,550 |
|
|
|
* |
|
|
|
|
* |
|
|
|
|
|
Net
income available to common shareholders |
$ |
63,202 |
|
|
$ |
56,538 |
|
|
$ |
58,805 |
|
|
|
12 |
|
% |
|
|
7 |
|
% |
|
|
Common Stock Data |
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
$ |
0.27 |
|
|
$ |
0.24 |
|
|
$ |
0.25 |
|
|
|
13 |
|
% |
|
|
8 |
|
% |
|
|
Basic
shares (thousands) |
|
231,856 |
|
|
|
231,573 |
|
|
|
233,111 |
|
|
|
* |
|
|
|
|
(1 |
) |
% |
|
|
Diluted
EPS |
$ |
0.27 |
|
|
$ |
0.24 |
|
|
$ |
0.25 |
|
|
|
13 |
|
% |
|
|
8 |
|
% |
|
|
Diluted
shares (thousands) |
|
234,092 |
|
|
|
233,576 |
|
|
|
235,058 |
|
|
|
* |
|
|
|
|
* |
|
|
|
|
Period-end
shares outstanding (thousands) |
|
233,235 |
|
|
|
232,019 |
|
|
|
234,237 |
|
|
|
1 |
|
% |
|
|
* |
|
|
|
|
Balance Sheet Highlights
(Period-End) |
|
|
|
|
|
|
|
|
|
|
Total
loans, net of unearned income |
$ |
19,555,787 |
|
|
$ |
18,589,337 |
|
|
$ |
16,725,492 |
|
|
|
5 |
|
% |
|
|
17 |
|
% |
|
|
Total
deposits |
|
21,574,180 |
|
|
|
20,630,177 |
|
|
|
18,865,220 |
|
|
|
5 |
|
% |
|
|
14 |
|
% |
|
|
Total
assets |
|
28,449,222 |
|
|
|
27,541,070 |
|
|
|
25,386,073 |
|
|
|
3 |
|
% |
|
|
12 |
|
% |
|
|
Total
liabilities |
|
25,704,640 |
|
|
|
24,849,146 |
|
|
|
22,805,828 |
|
|
|
3 |
|
% |
|
|
13 |
|
% |
|
|
Total equity |
|
2,744,582 |
|
|
|
2,691,924 |
|
|
|
2,580,245 |
|
|
|
2 |
|
% |
|
|
6 |
|
% |
|
|
Asset Quality Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
$ |
201,557 |
|
|
$ |
199,807 |
|
|
$ |
210,814 |
|
|
|
1 |
|
% |
|
|
(4 |
) |
% |
|
|
Allowance /
period-end loans |
|
1.03 |
% |
|
|
1.07 |
% |
|
|
1.26 |
% |
|
|
|
|
|
|
|
|
Net
charge-offs |
$ |
2,250 |
|
|
$ |
8,227 |
|
|
$ |
11,537 |
|
|
|
(73 |
) |
% |
|
|
(80 |
) |
% |
|
|
Net
charge-offs (annualized) / average loans |
|
0.05 |
% |
|
|
0.19 |
% |
|
|
0.28 |
% |
|
|
|
|
|
|
|
|
Non-performing assets (NPA) |
$ |
173,519 |
|
|
$ |
198,942 |
|
|
$ |
217,199 |
|
|
|
(13 |
) |
% |
|
|
(20 |
) |
% |
|
|
NPA % (a) |
|
0.85 |
% |
|
|
1.03 |
% |
|
|
1.25 |
% |
|
|
|
|
|
|
|
|
Key Ratios & Other |
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average assets (annualized) (b) |
|
0.97 |
% |
|
|
0.91 |
% |
|
|
0.99 |
% |
|
|
|
|
|
|
|
|
Return on
average common equity (annualized) (c) |
|
10.80 |
% |
|
|
10.04 |
% |
|
|
10.83 |
% |
|
|
|
|
|
|
|
|
Net interest margin (d) |
|
2.96 |
% |
|
|
2.92 |
% |
|
|
2.85 |
% |
|
|
|
|
|
|
|
|
Efficiency
ratio (e) |
|
69.94 |
% |
|
|
70.51 |
% |
|
|
74.54 |
% |
|
|
|
|
|
|
|
|
Common
equity tier 1 ratio (f) |
|
9.79 |
% |
|
|
10.05 |
% |
|
|
10.71 |
% |
|
|
|
|
|
|
|
|
Tier 1
ratio (f) |
|
11.00 |
% |
|
|
11.28 |
% |
|
|
12.11 |
% |
|
|
|
|
|
|
|
|
Market capitalization (millions) |
$ |
3,552.2 |
|
|
$ |
3,197.2 |
|
|
$ |
3,321.5 |
|
|
|
|
|
|
|
|
|
Certain previously reported amounts have been
reclassified to agree with current presentation. |
|
|
NM - Not
meaningful |
|
|
* Amount
is less than one percent. |
|
|
(a) |
NPAs related to the loan portfolio over period-end loans plus
foreclosed real estate and other assets. |
|
|
|
|
|
|
|
|
(b) |
Calculated using net income. |
|
|
(c) |
Calculated using net income available to common
shareholders. |
(d) |
Net interest margin is computed using net interest income
adjusted to a fully taxable equivalent ('FTE") basis assuming a
statutory federal income tax rate of 35 percent and, where
applicable, state income taxes. |
(e) |
Noninterest expense divided by total revenue excluding
securities gains/(losses). |
|
|
(f) |
Current quarter is an estimate. |
|
|
|
|
|
|
Use of Non-GAAP MeasuresA financial measure is
included in this release that is non-GAAP, meaning it is not
presented in accordance with generally accepted accounting
principles (GAAP) in the U.S. The non-GAAP item presented in
this release is return on tangible common equity, or ROTCE. This
measure is reported to FHN’s management and directors through
various internal reports. FHN’s management believes this measure is
relevant to understanding the financial condition, capital
position, and financial results of FHN and its business segments.
Non-GAAP measures are not formally defined by GAAP or codified in
the federal banking regulations, and other entities may use
calculation methods that differ from those used by First Horizon.
First Horizon has reconciled ROTCE to a comparable GAAP measure,
ROE, below:
|
Non-GAAP to GAAP Reconciliation |
Quarterly,
Unaudited |
|
|
|
|
|
|
|
(Thousands) |
|
3Q16 |
|
Average Tangible Common Equity
(Non-GAAP) |
|
Average
total equity (GAAP) |
$ |
2,718,319 |
|
Less:
Average noncontrolling interest (a) |
|
295,431 |
|
Less: Average preferred stock (a) |
|
95,624 |
|
(A) Total average common equity |
$ |
2,327,264 |
|
Less: Average intangible assets (GAAP) (b) |
|
214,260 |
|
(B) Average tangible common equity
(Non-GAAP) |
$ |
2,113,004 |
|
|
|
|
Annualized Net Income Available to Common
Shareholders |
|
(C) Net income available to common shareholders
(annualized) |
$ |
251,434 |
|
|
|
|
Ratios |
|
(C)/(A)
Return on average common equity ("ROE") (GAAP) |
|
10.8 |
% |
(C)/(B) Return on average tangible common equity
("ROTCE") (Non-GAAP) |
|
11.9 |
% |
(a) Included in Total equity on the Consolidated Balance
Sheet. |
(b) Includes goodwill and other intangible assets, net of
amortization. |
|
Conference callManagement will hold a
conference call at 8:30 a.m. Central Time today to review earnings
and performance trends. There will also be a live webcast
accompanied by the slide presentation available in the investor
relations section of www.FirstHorizon.com. The call and slide
presentation may involve forward-looking information, including
guidance.
Participants can call toll-free starting at 8:15 a.m. by dialing
888-317-6003 and entering pin number 6863781. The number for
international participants is 412-317-6061. Participants can also
listen to the live audio webcast with the accompanying slide
presentation through the website. A replay will be available from
noon today until midnight Oct. 29. To listen to the replay, dial
877-344-7529 or 412-317-0088. The access code is 10094200. The
event also will be archived and available on the website by
midnight Central Time.
Other informationThis press release contains
forward-looking statements involving significant risks and
uncertainties. A number of important factors could cause actual
results to differ materially from those in the forward-looking
information. Those factors include general economic and financial
market conditions, including expectations of and actual timing and
amount of interest rate movements including the slope of the yield
curve, competition, ability to execute business plans, geopolitical
developments, recent and future legislative and regulatory
developments, inflation or deflation, market (particularly real
estate market) and monetary fluctuations, natural disasters,
customer, investor and regulatory responses to these conditions and
items already mentioned in this press release, as well as critical
accounting estimates and other factors described in First Horizon's
annual report on Form 10-K and other recent filings with the SEC.
First Horizon disclaims any obligation to update any such factors
or to publicly announce the result of any revisions to any of the
forward-looking statements included herein or therein to reflect
future events or developments or changes in expectations.
Debt Investor MaterialsFirst Horizon expects to
post additional materials for debt investors Oct. 21 in the
investor relations section of www.FirstHorizon.com First
Horizon will also provide these materials to analysts at upcoming
meetings. The debt investor materials posted may contain
forward-looking statements, including guidance, involving
significant risks and uncertainties, which will be identified by
words such as "believe," "expect," "anticipate," "intend,"
"estimate," "should," "is likely," "will," "going forward" and
other expressions that indicate future events and trends and may be
followed by or reference cautionary statements. A number of factors
could cause actual results to differ materially from those in the
forward-looking information. These factors are outlined in our most
recent earnings press release and in more detail in our most
current 10-Q and 10-K reports. First Horizon disclaims any
obligation to update any of the forward-looking statements that are
made from time to time to reflect future events or developments or
changes in expectations.
About First HorizonThe 4,300 employees of First
Horizon National Corp. (NYSE:FHN) provide financial services
through more than 160 bank locations across Tennessee and the
southern U.S. and 29 FTN Financial offices across the U.S. The
company was founded during the Civil War in 1864 and has the 14th
oldest national bank charter in the country. First Tennessee
has the largest deposit market share in Tennessee and one of the
highest customer retention rates of any bank in the
country. FTN Financial is a capital markets industry leader in
fixed income sales, trading and strategies for institutional
customers in the U.S. and abroad. First Horizon has been recognized
as one of the nation's best employers by Working Mother and
American Banker. More information is available
at www.FirstHorizon.com.
FHN-G
CONTACT:
First Horizon Investor Relations, Aarti Bowman, (901) 523-4017
First Horizon Media Relations, James Dowd, (901) 523-4305
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