Momentum strong as First Horizon wraps up 2016
January 13 2017 - 07:00AM
Loans and deposits were up double-digit percentages, revenue grew 9
percent while expenses declined 12 percent, return on equity (ROE)
improved to 9.6 percent and return on tangible common equity
(ROTCE) increased to 10.6 percent in 2016. These metrics
illustrate that momentum at First Horizon National Corp. (NYSE:FHN)
remains strong as the 152-year-old financial services company
focuses on long-term profitability.
“Throughout the year our people remained focused on the right
things: supporting our customers, growing our business,
making the best use of our strong capital position, managing the
impact of interest rates and improving our operating leverage by
investing in ways that drive business,” said Bryan Jordan, First
Horizon’s chairman and CEO. “We made meaningful progress
toward each of our bonefish targets, and that momentum is
positioning this company for long-term success.”
2016 Financial Highlights and Accomplishments
(all comparisons vs 2015)
Diluted EPS $0.94 |
|
ROA0.87% |
|
ROTCE*10.6% |
|
CET1**9.9% |
|
|
Regional Bank |
|
-- Average
loans up 15%; average core deposits up 7% |
|
|
-- Strategic investments in recruiting, technology and growth
markets yielded revenue growth that significantly outpaced expense
growth |
|
|
--
Recruited 27 experienced bankers in expansion of specialty banking
groups focused on franchise finance, specialty healthcare,
equipment finance and music and entertainment |
|
|
Fixed Income |
|
-- Fixed
income product average daily revenue (ADR) up 18%, to $919,000 |
|
|
-- Other product revenues up 12%, to $40 million |
|
|
-- ROA
at 1.4%*; ROE at 23%* |
|
|
-- #1
underwriter of callable GSE debt |
|
|
-- Top-10 competitive municipal underwriter |
|
|
Consolidated |
|
-- Revenues
grew 9%, driven largely by 12% net interest income gain; expenses
decreased 12%*** |
|
|
-- Average loans up 10%; average core deposits up 11% |
|
|
-- Net
interest margin rose 11 basis points, driven by higher interest
rates, strong deposit market share and continued loan growth |
|
|
-- Non-performing assets down 22% |
|
|
-- ROE
up 596 basis points to 9.6% and ROTCE up 662 basis points to
10.6%*** |
|
|
|
|
|
|
|
|
|
|
Capital Deployment |
|
-- Acquired
franchise finance loan portfolio; agreed to acquire Coastal
Securities |
|
|
-- Repurchased approximately 7.4 million shares at an average
price of $12.67; closing price for First Horizon shares on Jan. 12
was $20.27 |
|
|
-- Declared common dividends of $0.28 per share |
|
|
|
* 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 estimate.*** Expenses included net litigation accruals of
$188 million in 2015, which dropped to $30 million in
2016.
Consolidated summary results
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q16 Changes vs. |
|
|
Twelve months ended |
|
2016 vs. |
(Dollars in thousands, except per share data) |
4Q16 |
|
3Q16 |
|
4Q15 |
|
3Q16 |
|
4Q15 |
|
|
|
2016 |
2015 |
|
|
2015 |
Income Statement
Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income |
$ |
195,551 |
|
|
$ |
185,195 |
|
|
$ |
166,652 |
|
6 |
|
% |
|
17 |
|
% |
|
|
$ |
729,084 |
|
$ |
653,720 |
|
|
12 |
|
% |
Noninterest
income |
|
124,209 |
|
|
|
148,745 |
|
|
|
130,793 |
|
(16 |
) |
% |
|
(5 |
) |
% |
|
|
|
551,100 |
|
|
515,947 |
|
|
7 |
|
% |
Securities gains/(losses), net |
|
(132 |
) |
|
|
(200 |
) |
|
|
1,439 |
|
34 |
|
% |
|
NM |
|
|
|
|
1,341 |
|
|
1,378 |
|
|
(3 |
) |
% |
|
Total
revenue |
|
319,628 |
|
|
|
333,740 |
|
|
|
298,884 |
|
(4 |
) |
% |
|
7 |
|
% |
|
|
|
1,281,525 |
|
|
1,171,045 |
|
|
9 |
|
% |
Noninterest expense |
|
237,897 |
|
|
|
233,558 |
|
|
|
243,740 |
|
2 |
|
% |
|
(2 |
) |
% |
|
|
|
925,204 |
|
|
1,053,791 |
|
|
(12 |
) |
% |
Provision for loan losses |
|
- |
|
|
|
4,000 |
|
|
|
1,000 |
|
NM |
|
|
NM |
|
|
|
|
11,000 |
|
|
9,000 |
|
|
22 |
|
% |
Income before income taxes |
|
81,731 |
|
|
|
96,182 |
|
|
|
54,144 |
|
(15 |
) |
% |
|
51 |
|
% |
|
|
|
345,321 |
|
|
108,254 |
|
|
NM |
|
Provision for income taxes |
|
24,008 |
|
|
|
28,547 |
|
|
|
2,715 |
|
(16 |
) |
% |
|
NM |
|
|
|
|
106,810 |
|
|
10,941 |
|
|
NM |
|
Net income |
|
57,723 |
|
|
|
67,635 |
|
|
|
51,429 |
|
(15 |
) |
% |
|
12 |
|
% |
|
|
|
238,511 |
|
|
97,313 |
|
|
NM |
|
Net income attributable to noncontrolling interest |
|
2,879 |
|
|
|
2,883 |
|
|
|
2,848 |
|
* |
|
|
1 |
|
% |
|
|
|
11,465 |
|
|
11,434 |
|
|
* |
|
Net income attributable to controlling interest |
|
54,844 |
|
|
|
64,752 |
|
|
|
48,581 |
|
(15 |
) |
% |
|
13 |
|
% |
|
|
|
227,046 |
|
|
85,879 |
|
|
NM |
|
Preferred stock dividends |
|
1,550 |
|
|
|
1,550 |
|
|
|
1,550 |
|
* |
|
|
* |
|
|
|
|
6,200 |
|
|
6,200 |
|
|
* |
|
|
Net
income available to common shareholders |
$ |
53,294 |
|
|
$ |
63,202 |
|
|
$ |
47,031 |
|
(16 |
) |
% |
|
13 |
|
% |
|
|
$ |
220,846 |
|
$ |
79,679 |
|
|
NM |
|
Common Stock Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
$ |
0.23 |
|
|
$ |
0.27 |
|
|
$ |
0.20 |
|
(15 |
) |
% |
|
15 |
|
% |
|
|
$ |
0.95 |
|
$ |
0.34 |
|
|
NM |
|
Basic
shares (thousands) |
|
232,731 |
|
|
|
231,856 |
|
|
|
237,983 |
|
* |
|
|
(2 |
) |
% |
|
|
|
232,700 |
|
|
234,189 |
|
|
(1 |
) |
% |
Diluted
EPS |
$ |
0.23 |
|
|
$ |
0.27 |
|
|
$ |
0.20 |
|
(15 |
) |
% |
|
15 |
|
% |
|
|
$ |
0.94 |
|
$ |
0.34 |
|
|
NM |
|
Diluted
shares (thousands) |
|
235,590 |
|
|
|
234,092 |
|
|
|
240,072 |
|
1 |
|
% |
|
(2 |
) |
% |
|
|
|
235,292 |
|
|
236,266 |
|
|
* |
|
Period-end
shares outstanding (thousands) |
|
233,624 |
|
|
|
233,235 |
|
|
|
238,587 |
|
* |
|
|
(2 |
) |
% |
|
|
|
233,624 |
|
|
238,587 |
|
|
(2 |
) |
% |
Balance Sheet Highlights
(Period-End) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
loans, net of unearned income |
$ |
19,589,520 |
|
|
$ |
19,555,787 |
|
|
$ |
17,686,502 |
|
* |
|
|
11 |
|
% |
|
|
|
|
|
|
|
|
|
Total
deposits |
|
22,672,363 |
|
|
|
21,574,180 |
|
|
|
19,967,478 |
|
5 |
|
% |
|
14 |
|
% |
|
|
|
|
|
|
|
|
|
Total
assets |
|
28,555,231 |
|
|
|
28,449,222 |
|
|
|
26,192,637 |
|
* |
|
|
9 |
|
% |
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
25,850,147 |
|
|
|
25,704,640 |
|
|
|
23,553,051 |
|
1 |
|
% |
|
10 |
|
% |
|
|
|
|
|
|
|
|
|
Total equity |
|
2,705,084 |
|
|
|
2,744,582 |
|
|
|
2,639,586 |
|
(1 |
) |
% |
|
2 |
|
% |
|
|
|
|
|
|
|
|
|
Asset Quality Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
$ |
202,068 |
|
|
$ |
201,557 |
|
|
$ |
210,242 |
|
* |
|
|
(4 |
) |
% |
|
|
|
|
|
|
|
|
|
Allowance /
period-end loans |
|
1.03 |
|
% |
|
1.03 |
|
% |
|
1.19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs |
$ |
(511 |
) |
|
$ |
2,250 |
|
|
$ |
1,572 |
|
NM |
|
|
NM |
|
|
|
|
|
|
|
|
|
|
Net
charge-offs (annualized) / average loans |
|
NM |
|
|
|
0.05 |
|
% |
|
0.04 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing assets (NPA) |
$ |
164,623 |
|
|
$ |
173,519 |
|
|
$ |
211,921 |
|
(5 |
) |
% |
|
(22 |
) |
% |
|
|
|
|
|
|
|
|
|
NPA % (a) |
|
0.80 |
|
% |
|
0.85 |
|
% |
|
1.15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Ratios & Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
average assets ("ROA") (quarters are annualized) (b) |
|
0.80 |
|
% |
|
0.97 |
|
% |
|
0.78 |
% |
|
|
|
|
|
|
|
|
0.87 |
% |
|
0.38 |
% |
|
|
|
Return on
average common equity ("ROE") (quarters are annualized) (c) |
|
9.00 |
|
% |
|
10.80 |
|
% |
|
8.23 |
% |
|
|
|
|
|
|
|
|
9.60 |
% |
|
3.64 |
% |
|
|
|
Return on
tangible common equity ("ROTCE") (quarters are annualized) (d) |
|
9.89 |
|
% |
|
11.90 |
|
% |
|
9.07 |
% |
|
|
|
|
|
|
|
|
10.59 |
% |
|
3.97 |
% |
|
|
|
Net interest margin (e) |
|
3.00 |
|
% |
|
2.96 |
|
% |
|
2.82 |
% |
|
|
|
|
|
|
|
|
2.94 |
% |
|
2.83 |
% |
|
|
|
Efficiency
ratio (f) |
|
74.40 |
|
% |
|
69.94 |
|
% |
|
81.94 |
% |
|
|
|
|
|
|
|
|
72.27 |
% |
|
90.09 |
% |
|
|
|
Common
equity tier 1 ratio ("CET1") (g) |
|
9.94 |
|
% |
|
9.81 |
|
% |
|
10.45 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1
ratio (g) |
|
11.17 |
|
% |
|
11.03 |
|
% |
|
11.79 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market capitalization (millions) |
$ |
4,674.8 |
|
|
$ |
3,552.2 |
|
|
$ |
3,464.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
This non-GAAP measure is reconciled to ROE in the non-GAAP to
GAAP reconciliation. |
|
|
|
|
|
|
|
|
(e) |
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. |
(f) |
Noninterest expense divided by total revenue excluding
securities gains/(losses). |
(g) |
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/Annually, Unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended |
|
(Thousands) |
4Q16 |
|
|
3Q16 |
|
|
4Q15 |
|
|
|
2016 |
|
|
|
2015 |
|
Average Tangible Common Equity
(Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
total equity (GAAP) |
$ |
2,746,828 |
|
|
$ |
2,718,319 |
|
|
$ |
2,659,575 |
|
|
$ |
2,691,478 |
|
|
$ |
2,581,187 |
|
Less:
Average noncontrolling interest (a) |
|
295,431 |
|
|
|
295,431 |
|
|
|
295,431 |
|
|
|
295,431 |
|
|
|
295,431 |
|
Less: Average preferred stock (a) |
|
95,624 |
|
|
|
95,624 |
|
|
|
95,624 |
|
|
|
95,624 |
|
|
|
95,624 |
|
(A) Total average common equity |
$ |
2,355,773 |
|
|
$ |
2,327,264 |
|
|
$ |
2,268,520 |
|
|
$ |
2,300,423 |
|
|
$ |
2,190,132 |
|
Less: Average intangible assets (GAAP) (b) |
|
213,019 |
|
|
|
214,260 |
|
|
|
211,757 |
|
|
|
214,915 |
|
|
|
183,127 |
|
(B) Average tangible common equity (Non-GAAP) |
$ |
2,142,754 |
|
|
$ |
2,113,004 |
|
|
$ |
2,056,763 |
|
|
$ |
2,085,508 |
|
|
$ |
2,007,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income Available to Common Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(C) Net income available to common shareholders
(quarters are annualized) |
$ |
212,017 |
|
|
$ |
251,434 |
|
|
$ |
186,590 |
|
|
$ |
220,846 |
|
|
$ |
79,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(C)/(A)
Return on average common equity ("ROE") (GAAP) |
|
9.0 |
% |
|
|
10.8 |
% |
|
|
8.2 |
% |
|
|
9.6 |
% |
|
|
3.6 |
% |
(C)/(B) Return on average tangible common equity
("ROTCE") (Non-GAAP) |
|
9.9 |
% |
|
|
11.9 |
% |
|
|
9.1 |
% |
|
|
10.6 |
% |
|
|
4.0 |
% |
(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 0550065. 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 Jan. 28. To listen to the replay, dial
877-344-7529 or 412-317-0088. The access code is 10098105. 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 Jan. 27 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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