Fundamentals remained strong in 2017 at First Horizon National
Corp. (NYSE:FHN), driven by solid growth trends in loans and
deposits at First Tennessee Bank, as well as the closing of the
Capital Bank transaction. Reported earnings per share were $0.65 in
2017, compared to $0.94 in 2016. On an adjusted basis, earnings per
share in 2017 were $1.11
1, excluding the impact
from tax reform, other tax adjustments and acquisition expense, as
well as other notable items. Reflected in the fourth quarter
results are the previously announced $1,000 bonuses to
approximately 70 percent of First Horizon employees, and a
contribution of $16.5 million to the company’s Foundation.
During the fourth quarter, First Horizon completed the merger
with Capital Bank that had been announced in May, 2017, resulting
in a $41 billion asset organization with more than 350 branches
serving the Southeast. While the Capital Bank merger closed late in
the quarter, significant progress has been made on integration
planning. Further, our expectations of revenue and cost synergies
have increased over the past six months.
“The fourth quarter caps an outstanding and transformative 2017.
Our adjusted core results were strong with continued robust
customer activity,” said Bryan Jordan, First Horizon’s chairman and
CEO. “We closed our merger with Capital Bank, the largest in our
company’s history, significantly expanding our balance sheet,
customers, markets and opportunities, all as we identified greater
cost savings and revenue opportunities than originally announced.
We begin 2018 with momentum and confidence in our abilities to
create value for our communities, customers and
shareholders.”
2017 Financial Highlights (all comparisons vs
2016)
Diluted EPS /Adjusted
EPS1$0.65 / $1.11 |
|
ROA /Adjusted ROA10.59% /
0.96% |
|
ROTCE1 /Adjusted
ROTCE17.2% / 12.6% |
Regional Banking Highlights
- Pre-tax income up 36 percent
- Revenue up 12 percent from increased net interest income and
higher fee income• Net interest income up 14 percent,
primarily from higher loan volume with the Capital Bank acquisition
and growth in specialty lending areas• Fee income up 4
percent, reflects growth in brokerage, trust and other
services
- Average loans up 13 percent and average deposits up 11
percent
Other Highlights
- Fixed income average daily revenue at $696,000 in 2017
- Net interest margin expanded to 3.12 percent from 2.94
percent
- Loan loss provision at $0 in 2017, reflects continued strong
performance in both the commercial and consumer portfolios
- Period-end assets of $41 billion
1These non-GAAP numbers that are reconciled to reported GAAP
numbers in the non-GAAP table that follows
CONSOLIDATED SUMMARY RESULTS |
|
|
|
|
|
|
|
|
|
|
|
|
4Q17 Changes vs. |
|
Twelve Months Ended |
|
2017 vs. |
(Dollars
in thousands, except per share data) |
4Q17 |
|
3Q17 |
|
4Q16 |
|
3Q17 |
4Q16 |
|
2017 |
|
2016 |
|
2016 |
Income
Statement Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income |
$ |
242,088 |
|
|
$ |
209,817 |
|
|
$ |
195,551 |
|
|
15 |
|
% |
24 |
|
% |
|
$ |
842,314 |
|
|
$ |
729,084 |
|
|
16 |
|
% |
Noninterest income |
133,053 |
|
|
112,411 |
|
|
124,209 |
|
|
18 |
|
% |
7 |
|
% |
|
489,627 |
|
|
551,100 |
|
|
(11 |
) |
% |
Securities gains/(losses), net |
137 |
|
|
6 |
|
|
(132 |
) |
|
NM |
|
|
NM |
|
|
|
592 |
|
|
1,341 |
|
|
(56 |
) |
% |
Total revenue |
375,278 |
|
|
322,234 |
|
|
319,628 |
|
|
16 |
|
% |
17 |
|
% |
|
1,332,533 |
|
|
1,281,525 |
|
|
4 |
|
% |
Noninterest
expense |
346,670 |
|
|
236,869 |
|
|
237,897 |
|
|
46 |
|
% |
46 |
|
% |
|
1,023,661 |
|
|
925,204 |
|
|
11 |
|
% |
Provision
for loan losses |
3,000 |
|
|
— |
|
|
— |
|
|
NM |
|
|
NM |
|
|
|
— |
|
|
11,000 |
|
|
NM |
|
|
Income
before income taxes |
25,608 |
|
|
85,365 |
|
|
81,731 |
|
|
(70 |
) |
% |
(69 |
) |
% |
|
308,872 |
|
|
345,321 |
|
|
(11 |
) |
% |
Provision
for income taxes |
73,989 |
|
|
13,596 |
|
|
24,008 |
|
|
NM |
|
|
NM |
|
|
|
131,892 |
|
|
106,810 |
|
|
23 |
|
% |
Net
income/(loss) |
(48,381 |
) |
|
71,769 |
|
|
57,723 |
|
|
NM |
|
|
NM |
|
|
|
176,980 |
|
|
238,511 |
|
|
(26 |
) |
% |
Net
income attributable to noncontrolling interest |
2,910 |
|
|
2,883 |
|
|
2,879 |
|
|
1 |
|
% |
1 |
|
% |
|
11,465 |
|
|
11,465 |
|
|
* |
|
Net income/(loss)
attributable to controlling interest |
(51,291 |
) |
|
68,886 |
|
|
54,844 |
|
|
NM |
|
|
NM |
|
|
|
165,515 |
|
|
227,046 |
|
|
(27 |
) |
% |
Preferred
stock dividends |
1,550 |
|
|
1,550 |
|
|
1,550 |
|
|
* |
|
* |
|
|
6,200 |
|
|
6,200 |
|
|
* |
|
Net
income/(loss) available to common shareholders |
$ |
(52,841 |
) |
|
$ |
67,336 |
|
|
$ |
53,294 |
|
|
NM |
|
|
NM |
|
|
|
159,315 |
|
|
$ |
220,846 |
|
|
(28 |
) |
% |
Common Stock
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS |
$ |
(0.20 |
) |
|
$ |
0.29 |
|
|
$ |
0.23 |
|
|
NM |
|
NM |
|
|
$ |
0.66 |
|
|
$ |
0.95 |
|
|
(31 |
) |
% |
Basic shares
(thousands) |
265,169 |
|
|
233,749 |
|
|
232,731 |
|
|
13 |
|
% |
14 |
|
% |
|
241,436 |
|
|
232,700 |
|
|
4 |
|
% |
Diluted EPS |
$ |
(0.20 |
) |
|
$ |
0.28 |
|
|
$ |
0.23 |
|
|
NM |
|
NM |
|
|
$ |
0.65 |
|
|
$ |
0.94 |
|
|
(31 |
) |
% |
Diluted shares
(thousands) |
265,169 |
|
|
236,340 |
|
|
235,590 |
|
|
12 |
|
% |
13 |
|
% |
|
244,453 |
|
|
235,292 |
|
|
4 |
|
% |
Period-end shares
outstanding (thousands) |
326,736 |
|
|
234,231 |
|
|
233,624 |
|
|
39 |
|
% |
40 |
|
% |
|
326,736 |
|
|
233,624 |
|
|
40 |
|
% |
Cash dividends declared
per share |
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.07 |
|
|
* |
|
29 |
|
% |
|
$ |
0.36 |
|
|
$ |
0.28 |
|
|
29 |
|
% |
Balance Sheet Highlights (Period-End) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans, net of
unearned income |
$ |
27,658,929 |
|
|
$ |
20,166,091 |
|
|
$ |
19,589,520 |
|
|
37 |
|
% |
41 |
|
% |
|
|
|
|
|
|
|
Total deposits |
30,629,196 |
|
|
22,099,254 |
|
|
22,672,363 |
|
|
39 |
|
% |
35 |
|
% |
|
|
|
|
|
|
|
Total assets |
41,423,388 |
|
|
29,622,636 |
|
|
28,555,231 |
|
|
40 |
|
% |
45 |
|
% |
|
|
|
|
|
|
|
Total liabilities |
36,842,900 |
|
|
26,739,085 |
|
|
25,850,147 |
|
|
38 |
|
% |
43 |
|
% |
|
|
|
|
|
|
|
Total equity |
4,580,488 |
|
|
2,883,551 |
|
|
2,705,084 |
|
|
59 |
|
% |
69 |
|
% |
|
|
|
|
|
|
|
Asset Quality Highlights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses |
$ |
(189,555 |
) |
|
$ |
(194,867 |
) |
|
$ |
(202,068 |
) |
|
(3 |
) |
% |
(6 |
) |
% |
|
|
|
|
|
|
|
Allowance / period-end
loans |
0.69 |
|
% |
0.97 |
|
% |
1.03 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs |
$ |
8,312 |
|
|
$ |
2,390 |
|
|
$ |
(511 |
) |
|
NM |
|
|
NM |
|
|
|
|
|
|
|
|
|
Net charge-offs
(annualized) / average loans |
0.15 |
|
% |
0.05 |
|
% |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing assets
(NPA) |
$ |
177,156 |
|
|
$ |
140,177 |
|
|
$ |
164,623 |
|
|
26 |
|
% |
8 |
|
% |
|
|
|
|
|
|
|
NPA % (a) |
0.61 |
|
% |
0.66 |
|
% |
0.80 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Key Ratios & Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets ("ROA") (quarters are annualized) (b) |
(0.58 |
) |
% |
0.99 |
|
% |
0.80 |
|
% |
|
|
|
|
|
0.59 |
|
% |
0.87 |
|
% |
|
|
Return on average
common equity ("ROE") (quarters are annualized) (c) |
(6.73 |
) |
% |
10.79 |
|
% |
9.00 |
|
% |
|
|
|
|
|
6.18 |
|
% |
9.60 |
|
% |
|
|
Return on tangible
common equity ("ROTCE") (quarters are annualized) (d) |
(8.78 |
) |
% |
12.17 |
|
% |
9.89 |
|
% |
|
|
|
|
|
7.23 |
|
% |
10.59 |
|
% |
|
|
Net interest margin
(e) |
3.27 |
|
% |
3.19 |
|
% |
3.00 |
|
% |
|
|
|
|
|
3.12 |
|
% |
2.94 |
|
% |
|
|
Efficiency ratio
(f) |
92.41 |
|
% |
73.51 |
|
% |
74.40 |
|
% |
|
|
|
|
|
76.85 |
|
% |
72.27 |
|
% |
|
|
Common equity tier 1
ratio ("CET1") (g) |
8.68 |
|
% |
10.04 |
|
% |
9.94 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Tier 1 ratio (g) |
9.64 |
|
% |
11.20 |
|
% |
11.17 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
Market
capitalization (millions) |
$ |
6,531.5 |
|
|
$ |
4,485.5 |
|
|
$ |
4,674.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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;
estimate does not include the favorable impact of reclassification
from AOCI to retained earnings of approximately $58 million in
connection with tax law change per bank regulatory guidance issued
on January 18, 2018.
Use of Non-GAAP MeasuresSeveral financial
measures in this release are non-GAAP, meaning they are not
presented in accordance with generally accepted accounting
principles (GAAP) in the U.S. The non-GAAP items presented in this
release are adjusted earnings per share ("EPS"), return on tangible
common equity ("ROTCE"), adjusted ROTCE, and adjusted return on
average assets ("ROA"). These profitability measures are reported
to First Horizon’s management and directors through various
internal reports. First Horizon’s management believes these
measures are relevant to understanding the financial results of
First Horizon 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 each of these measures to a comparable GAAP measure
below:
FHN NON-GAAP TO GAAP RECONCILIATION |
|
|
|
|
|
|
Twelve Months Ended |
|
(Dollars
and shares in thousands, except per share data) |
4Q17 |
|
|
|
3Q17 |
|
|
|
4Q16 |
|
|
|
2017 |
|
2016 |
|
Average Tangible Common Equity (Non-GAAP) |
|
Average total equity
(GAAP) |
$ |
3,506,165 |
|
|
|
$ |
2,866,757 |
|
|
|
$ |
2,746,828 |
|
|
|
2,970,308 |
|
|
2,691,478 |
|
|
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 |
3,115,110 |
|
|
|
2,475,702 |
|
|
|
2,355,773 |
|
|
|
2,579,253 |
|
|
2,300,423 |
|
|
Less:
Average intangible assets (GAAP) (b) |
726,958 |
|
|
|
280,575 |
|
|
|
213,019 |
|
|
|
376,306 |
|
|
214,915 |
|
|
(B)
Average tangible common equity (Non-GAAP) |
$ |
2,388,152 |
|
|
|
$ |
2,195,127 |
|
|
|
$ |
2,142,754 |
|
|
|
2,202,947 |
|
|
2,085,508 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Available to Common Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
(C) Net
income/(loss) available to common shareholders (quarters are
annualized) (GAAP) |
(209,641 |
) |
|
|
267,148 |
|
|
|
212,017 |
|
|
|
159,315 |
|
|
220,846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
(C)/(A) Return on
average common equity ("ROE") (GAAP) |
(6.73 |
) |
% |
|
10.79 |
|
% |
|
9.00 |
|
% |
|
6.18 |
|
% |
9.60 |
|
% |
(C)/(B)
Return on average tangible common equity ("ROTCE") (Non-GAAP) |
(8.78 |
) |
% |
|
12.17 |
|
% |
|
9.89 |
|
% |
|
7.23 |
|
% |
10.59 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income Available to Common
("NIAC")/EPS |
|
|
|
2017 |
|
(Dollars in
Millions) |
|
|
|
|
Pre-tax Income |
|
|
NIAC |
Diluted EPS |
|
Reported
(GAAP) |
|
|
|
|
|
|
$ |
308.9 |
|
|
|
$ |
159.3 |
|
(D) |
$ |
0.65 |
|
(c) |
Mortgage Repurchase
Liability |
|
|
|
|
|
|
(20.0 |
) |
|
|
(12.4 |
) |
|
|
|
Acquisition
Expenses |
|
|
|
|
|
|
61.3 |
|
|
|
38.0 |
|
|
|
|
Legal Matters |
|
|
|
|
|
|
40.3 |
|
|
|
29.2 |
|
|
|
|
Loss on Equity
Securities Repurchase |
|
|
|
|
|
|
14.3 |
|
|
|
8.9 |
|
|
|
|
Special Employee
Bonuses |
|
|
|
|
|
|
9.9 |
|
|
|
8.2 |
|
|
|
|
Tax Reform |
|
|
|
|
|
|
|
N/A |
|
|
|
82.0 |
|
|
|
|
Capital Loss
Valuation/Other |
|
|
|
|
|
|
|
N/A |
|
|
|
(42.0 |
) |
|
|
|
Adjusted
(Non-GAAP) |
|
|
|
|
|
|
$ |
414.7 |
|
|
|
$ |
271.2 |
|
(E) |
$ |
1.11 |
|
(c) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income |
|
|
|
|
|
|
|
|
|
|
|
2017 |
|
(Dollars in
Millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(F) Net income
(GAAP) |
|
|
|
|
|
|
|
|
|
|
|
$ |
177.0 |
|
|
Less: After Tax
Impact of Notable Items |
|
|
|
|
|
|
|
|
|
|
|
(111.8 |
) |
|
(G) Adjusted net income
(Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
$ |
288.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
(H) Average Assets
(GAAP) |
|
|
|
|
|
|
|
|
|
|
|
$ |
29,924.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Tangible Common Equity (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(I) Average tangible
common equity (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
$ |
2,202.9 |
|
|
Less: Equity impact for
notable items (d) |
|
|
|
|
|
|
|
|
|
|
|
49.2 |
|
|
(J) Adjusted average
tangible common equity (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
$ |
2,153.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
(F)/(H) Return on
Average Assets ("ROA") (GAAP ) |
|
|
|
|
|
|
|
|
|
|
|
0.59 |
|
% |
(G)/(H) Adjusted ROA
(Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
0.96 |
|
% |
(D)/(I) ROTCE
(Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
7.2 |
|
% |
(E)/(J)
Adjusted ROTCE (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
12.6 |
|
% |
Numbers may not add to total due to rounding.(a) Included in
Total equity on the Consolidated Balance Sheet.(b) Includes
goodwill and other intangible assets, net of amortization.(c)
Calculated using diluted shares of 244.5 million.(d) Includes the
average annual after-tax impact of $(27.9) million of notable items
recognized in second quarter 2017 and $7.1 million of notable items
recognized in third quarter 2017.
Conference call
Management 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.
Callers wishing to participate may call toll-free starting at
8:15 a.m. CT on Jan. 19 by dialing 888-317-6003 and entering access
code 2418560. 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 investor relations
section of www.fhnc.com. A replay will be available from noon
CT on Jan. 19 until midnight CT on Feb. 3. To listen to the replay,
dial 877-344-7529 or 412-317-0088. The access code is 10115517. The
event also will be archived and available beginning Jan. 20 by
midnight CT in the events and presentations section
of http://ir.fhnc.com.
Debt Investor MaterialsFirst Horizon expects to
post additional materials for debt investors on February 2 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.
Disclaimers and Other Information
This communication 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.
About First Horizon
First Horizon National Corp. (NYSE:FHN) provides financial
services through its First Tennessee, Capital Bank, FTB Advisors,
and FTN Financial businesses. First Horizon operates more than 350
bank locations across the southern U.S. and 28 FTN Financial
offices across the entire U.S. Our banking subsidiary was founded
in 1864 and has the 14th oldest national bank charter in the
country. Our First Tennessee and Capital Bank brands have the
largest deposit market share in Tennessee and one of the highest
customer retention rates of any bank in the country. We have been
ranked by American Banker as No. 5 among the Top 10 Most Reputable
U.S. Banks. Our FTB Advisors wealth management group has over 300
financial advisors and about $30 billion in assets under
administration. FTN Financial is a capital markets industry leader
in fixed income sales, trading and strategies for institutional
customers in the U.S. and abroad. We have been recognized as one of
the nation’s best employers by Working Mother and American Banker
magazines and the National Association for Female Executives. More
information is available at www.FirstHorizon.com.
FHN-G
CONTACT:First Horizon Investor Relations, Aarti
Bowman, (901) 523-4017First Horizon Media Relations, James Dowd,
(901) 523-4305
First Horizon (NYSE:FHN)
Historical Stock Chart
From Mar 2024 to Apr 2024
First Horizon (NYSE:FHN)
Historical Stock Chart
From Apr 2023 to Apr 2024