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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): April 16, 2019
 
 
First Horizon National Corporation
(Exact Name of Registrant as Specified in Charter)
 
 
TN
001-15185
62-0803242
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)
 
165 MADISON AVENUE
 
MEMPHIS, TENNESSEE
38103
(Address of principal executive office)
(Zip Code)
 
Registrant’s telephone number, including area code: (901) 523-4444
 
 
(Former name or former address, if changed from last report)
 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
 
 
 
o Emerging growth company
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


 
 
 









ITEM 2.02. Results of Operations and Financial Condition.
ITEM 7.01. Regulation FD Disclosure.
 
Furnished as Exhibit 99.1 is a copy of the First Horizon National Corporation (“FHN”) First Quarter 2019 Financial Supplement and as Exhibit 99.2 is a copy of the Investor Slide Presentation for the quarter ended March 31, 2019, both of which were released today.

The foregoing information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition” and Item 7.01, “Regulation FD Disclosure.” The exhibit speaks as of the date thereof and FHN does not assume any obligation to update in the future the information therein.
 
Use of Non-GAAP Measures and Regulatory Measures that are not GAAP in the Exhibits
 
Certain measures are included in the exhibits that are “non-GAAP,” meaning (under U.S. financial reporting rules) they are not presented in accordance with generally accepted accounting principles (“GAAP”) in the U.S. and also are not codified in the U.S. banking regulations currently applicable to FHN. Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN’s management believes such measures are relevant to understanding the financial condition, capital position, and financial results of FHN and its business segments. Non-GAAP measures are reported to FHN’s management and directors through various internal reports.
 
Presentation of regulatory measures, some of which follow regulatory definitions rather than GAAP, provides a meaningful base for comparability to other financial institutions subject to the same regulations as FHN. Such measures are used by the various banking regulators in reviewing the performance, stability, and capital adequacy of financial institutions they regulate. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. Regulatory measures used in the exhibits include: common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; risk weighted assets (“RWA”), which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios; and pre-provision net revenue (“PPNR”), calculated by adding the provision/(provision credit) for loan losses to income before income taxes, excluding securities gains/(losses).
 
The non-GAAP measures presented in the exhibits include: return on average tangible common equity (“ROTCE”); tangible common equity (“TCE”) to tangible assets (“TA”); tangible book value ("TBV") per common share; adjusted ROTCE; and various performance measures and ratios adjusted for notable items identified in the exhibits.
 
Reconciliations of non-GAAP to GAAP measures and presentation of the most comparable GAAP items are presented near the end (immediately before the Glossary) of the Financial Supplement and at the end of the Investor Slide Presentation.

Forward-Looking Statements

This financial supplement and investor slide presentation contain 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, customer and investor responses to these conditions, ability to execute business plans, geopolitical developments, recent and future legislative and regulatory developments, natural disasters, and items mentioned in this financial supplement, investor slide presentation and in FHN's most recent earnings release, as well as critical accounting estimates and other factors described in FHN’s recent filings with the SEC. FHN disclaims any obligation to update any such forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements to reflect future events or developments.












ITEM 9.01. Financial Statements and Exhibits.
 
(d)
Exhibits

The following exhibits are furnished pursuant to Items 2.02 and 7.01, are not to be considered “filed” under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and shall not be incorporated by reference into any of FHN’s previous or future filings under the Securities Act of 1933, as amended, or the Exchange Act.
 
Exhibit #
 
Description
 
 
 
 
 


















































SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
First Horizon National Corporation
 
 
 
 
 
 
Date: April 16, 2019
By: 
/s/ William C. Losch III
 
 
William C. Losch III
 
 
Executive Vice President and Chief Financial Officer















































(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1 FINANCIAL SUPPLEMENT)

Exhibit




1







397536900_fhna16.jpg




FIRST QUARTER 2019
 
FINANCIAL SUPPLEMENT

 
If you need further information, please contact:
Aarti Bowman, Investor Relations
901-523-4017
[email protected]




FHN TABLE OF CONTENTS
 
 
 
Page
 
 
First Horizon National Corporation Segment Structure
 
 
Performance Highlights
 
 
Consolidated Results
 
       Income Statement
 
             Income Statement
             Other Income and Other Expense
       Balance Sheet
 
            Period End Balance Sheet
            Average Balance Sheet
            Net Interest Income
            Average Balance Sheet: Yields and Rates
 
 
Capital Highlights
 
 
Business Segment Detail
 
         Segment Highlights
         Regional Banking
         Fixed Income and Corporate
         Non-Strategic
 
 
Asset Quality
 
          Asset Quality: Consolidated
          Asset Quality: Regional Banking and Corporate
          Asset Quality: Non-Strategic
 
 
Non-GAAP to GAAP Reconciliation
 
 
Glossary of Terms
 
 
Other Information
This financial supplement 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, customer and investor responses to these conditions, ability to execute business plans, geopolitical developments, recent and future legislative and regulatory developments, natural disasters, and items mentioned in this financial supplement and in First Horizon National Corporation’s (“FHN”) most recent earnings release, as well as critical accounting estimates and other factors described in FHN’s recent filings with the SEC. FHN disclaims any obligation to update any such forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements to reflect future events or developments.
 
Use of Non-GAAP Measures and Regulatory Measures that are not GAAP
Certain measures are included in this financial supplement that are “non-GAAP,” meaning (under U.S. financial reporting rules) they are not presented in accordance with generally accepted accounting principles (“GAAP”) in the U.S. and also are not codified in U.S. banking regulations currently applicable to FHN. Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN’s management believes such measures are relevant to understanding the financial condition, capital position, and financial results of FHN and its business segments. Non-GAAP measures are reported to FHN’s management and Board of Directors through various internal reports.
 
Presentation of regulatory measures, some of which follow regulatory definitions rather than GAAP, provides a meaningful base for comparability to other financial institutions subject to the same regulations as FHN. Such measures are used by the various banking regulators in reviewing the performance, stability, and capital adequacy of financial institutions they regulate. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. Regulatory measures used in this financial supplement include: common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; risk weighted assets (“RWA”), which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios; and pre-provision net revenue (“PPNR”), calculated by adding the provision/(provision credit) for loan losses to income before income taxes, excluding securities gains/(losses).
 
The non-GAAP measures presented in this financial supplement are return on average tangible common equity (“ROTCE”), tangible common equity (“TCE”) to tangible assets (“TA”), and tangible book value ("TBV") per common share.
 
Refer to the tabular reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items on page 21 of this financial supplement.

2





FIRST HORIZON NATIONAL CORPORATION SEGMENT STRUCTURE
397536900_a21jpga25.gif
 
 
  397536900_slide1a13.jpg

3




FHN PERFORMANCE HIGHLIGHTS
 
 
Summary of First Quarter 2019 Notable Items
Segment
 
Item
 
Income Statement
 
Amount Favorable/
(Unfavorable)
 
Comments
Corporate
 
Restructuring, repositioning, and efficiency initiatives
 
Noninterest expense: various
 
$(12.2) million
 
Primarily pre-tax severance-related costs and professional fees associated with efficiency initiatives
 
 
 
 
 
 
 
 
 
Corporate
 
Acquisition expenses
 
Noninterest expense: various
 
$(5.7) million
 
Pre-tax acquisition-related expenses primarily associated with the Capital Bank Financial Corp. ("CBF") acquisition
 
 
 
 
 
 
 
 
 
First Quarter 2019 vs. Fourth Quarter 2018

Consolidated
 
 
 
 
 
 
l 1Q19 diluted EPS of $.31 compared to $.30 in 4Q18

l Total revenue up 6% as increase in fee income offset lower NII

l Increase in fee income largely due to higher fixed income revenue; 4Q18 fee income includes unfavorable adjustment to debit card income

l NII down from decreased loan accretion and fewer days in 1Q19

l NIM of 3.31% in 1Q19 compared to 3.38% in 4Q18; decrease due to increase in interest bearing cash & lower loan accretion

l    Loan loss provision increase primarily driven by commercial loan growth & one relationship that was downgraded within Regional Banking
   l   Net charge-offs decreased $7.0 million to $4.5 million in 1Q19

l    Deferred compensation net impact of $1.6 million; expense increase of $13.2 million, offset by fee income increase of $11.6 million

l    1Q19 includes $12.2 million of restructuring costs and $5.7 million of acquisition-related expenses, compared to $11.6 million of acquisition costs in 4Q18

l    Period-end loan growth reflects a 2% increase in Regional Banking, offset by a 6% run-off in Non-strategic
 
 
 
 
 
 
 
 
(Thousands, except per share data)
1Q19

 
4Q18

 
Change
 
Income Statement
 
 
 
 
 
 
 
Net interest income
$
294,508

 
$
302,512

 
(3
)
%
 
Noninterest income
141,045

 
110,274

 
28

%
 
      Total revenues
435,553

 
412,786

 
6

%
 
Provision for loan losses
9,000

 
6,000

 
50

%
 
Noninterest expense
296,090

 
281,932

 
5

%
 
      Income before income taxes
130,463

 
124,854

 
4

%
 
Provision for income taxes
27,058

 
24,049

 
13

%
 
     Net income/(loss)
$
103,405

 
$
100,805

 
3

%
 
Diluted EPS
$
0.31

 
$
0.30

 
3

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet (millions)
 
 
 
 
 
 
 
Average Loans
$
27,313

 
$
27,155

 
1

%
 
Average Deposits
32,497

 
31,848

 
2

%
 

Regional Banking
 
 
 
 
 
 
l       Strong loan and deposit growth
   l Period-end loans up 2%; Period-end deposits up 3%
   l  Deposit growth from key markets in Mid-Atlantic & South Florida
   l NII down from lower loan accretion, fewer days in 1Q19 & funds transfer pricing methodology with offset in Corporate

l    Fee income up 4%; 1Q19 fee income impacted by seasonality in NSF fee income; 4Q18 includes unfavorable adjustment to debit card income

l    Provision expense increase primarily driven by commercial loan growth and one relationship that was downgraded during the quarter
      l   Net charge-offs decreased $7.1 million to $5.5 million in 1Q19

l   Expenses down 3%
      l Broad-based cost savings across multiple line items driven by strategic-focus on expense optimization
 
 
 
 
 
 
 
 
(Thousands)
1Q19

 
4Q18

 
Change
 
Net interest income
$
287,157

 
$
299,640

 
(4
)
%
 
Noninterest income
72,117

 
69,208

 
4

%
 
     Total revenues
359,274

 
368,848

 
(3
)
%
 
Provision for loan losses
13,958

 
7,850

 
78

%
 
Noninterest expense
199,959

 
206,372

 
(3
)
%
 
     Income before income taxes
$
145,357

 
$
154,626

 
(6
)
%
 
PPNR (a)
159,315

 
162,476

 
(2
)
%
 
 
 
 
 
 
 
 
 
Balance Sheet (millions)
 
 
 
 
 
 
 
Period-end loans
$
26,896

 
$
26,385

 
2

%
 
Period-end deposits
30,376

 
29,370

 
3

%
 
(a) Pre-provision net revenue is not a GAAP number but is used in regulatory stress test reporting. The presentation of PPNR in this Financial Supplement follows the regulatory definition.

Fixed Income
 
 
 
 
 
 
l Federal Reserve commentary and outlook for rates to be flat/down favorably impacted 1Q19 activity

l     1Q19 ADR of $729 thousand, up 48 percent with all trading desks showing growth from 4Q18

l Pre-tax income up from higher ADR and lower fixed expenses
 
 
 
 
 
 
 
 
(Thousands)
1Q19

 
4Q18

 
Change
 
Net interest income
$
7,322

 
$
9,002

 
(19
)
%
 
Noninterest income
53,807

 
39,678

 
36

%
 
     Total revenues
61,129

 
48,680

 
26

%
 
Noninterest expense
51,227

 
46,947

 
9

%
 
     Income before income taxes
$
9,902

 
$
1,733

 
NM

 
 
NM - Not meaningful
 
 
 
 
 
 
 
 

4




FHN PERFORMANCE HIGHLIGHTS (continued)
 
 
First Quarter 2019 vs. Fourth Quarter 2018 (continued)
 
 
 
 
Corporate
 
 
 
 
 
 
l    NII favorably impacted by reduction in market-indexed deposits primarily due to strong deposit growth in Regional Banking

l    Deferred compensation net impact of $1.6 million; expense increase of $13.2 million, offset by fee income increase of $11.6 million

l    Expense increase also driven by restructuring costs associated with efficiency initiatives, somewhat offset by lower acquisition-related costs
 
 
 
 
 
 
 
 
(Thousands)
1Q19

 
4Q18

 
Change
 
Net interest income
$
(7,853
)
 
$
(15,334
)
 
49

%
 
Noninterest income
13,352

 
(1,411
)
 
NM

 
 
     Total revenues
5,499

 
(16,745
)
 
NM

 
 
Noninterest expense
40,351

 
23,127

 
74

%
 
     Income before income taxes
$
(34,852
)
 
$
(39,872
)
 
13

%
 
NM - Not meaningful
 
 
 
 
 
 
 
 

Non-Strategic
 
 
 
 
 
 
l  Non-Strategic results reflect continuing wind-down of the loan portfolio
 
 
 
 
 
 
 
 
(Thousands)
1Q19

 
4Q18

 
Change
 
Net interest income
$
7,882

 
$
9,204

 
(14
)
%
 
Noninterest income
1,769

 
2,799

 
(37
)
%
 
     Total revenues
9,651

 
12,003

 
(20
)
%
 
Provision for loan losses
(4,958
)
 
(1,850
)
 
NM

 
 
Noninterest expense
4,553

 
5,486

 
(17
)
%
 
     Income before income taxes
$
10,056

 
$
8,367

 
20

%
 
 
 
 
 
 
 
 
 
Balance Sheet
 
 
 
 
 
 
 
Average loans
$
1,005

 
$
1,068

 
(6
)
%
 
NM - Not meaningful
 
 
 
 
 
 
 
 

Asset Quality
 
 
 
 
 
 
 
l    Increase in reserves primarily driven by loan growth within the commercial portfolio

l    Net charge-offs were $4.5 million in 1Q19 compared to $11.5 million in 4Q18 driven by the C&I and Other Consumer portfolios

l    Criticized and classified commercial loans down $78 million
   l   Nonperforming loans at 65 bps, up 11 bps, largely due to three C&I credits

l    Decrease in 30+ delinquencies driven by payoffs and loans becoming current within the consumer portfolio
 
 
 
 
 
 
 
 
(Thousands)
1Q19

 
4Q18

 
Change
 
Allowance for loan losses
$184,911
 
$180,424
 
2

%
 
Allowance / loans %
0.66
%
 
0.66
%
 



 
Net Charge-offs
$
4,513

 
$11,535
 
(61
)
%
 
Net charge-offs %
0.07
%
 
0.17
%
 



 
Nonperforming Loans (a)
$181,625
 
$147,749
 
23

%
 
NPL %
0.65
%
 
0.54
%
 



 
30+ delinquencies
$
63,693

 
$75,164
 
(15
)
%
 
30+ delinquencies %
0.23
%
 
0.27
%
 



 
* Amount is less than one percent.
 
 
 
 
 
 
 
 
(a) Excludes loans held-for-sale.
 
 
 
 
 
 
 
 

Capital and Liquidity
 
 
 
 
 
 
 
l Increased quarterly dividend to $.14 in 1Q19 from $.12 in 4Q18

l Repurchased 3.5 million shares (weighted average price - $14.85) in 1Q19 compared to 5.4 million shares (weighted average price - $15.00) in 4Q18

l $349.0 million remaining authorization under the stock purchase authorization first announced in January 2018, currently scheduled to expire January 31, 2021
 
 
 
 
 
 
 
 
(millions)
1Q19

 
4Q18

 
Change
 
Common dividends declared (a)
$
44.3

 
$
38.4

 
15

%
 
Preferred dividends declared
$
1.6

 
$
1.6

 
*

 
 
Share repurchases
$
51.5

 
$
80.5

 
(36
)
%
 
Capital Ratios (b)
 
 
 
 
 
 
 
Common Equity Tier 1
9.66
%
 
9.77
%
 



 
Tier 1
10.69
%
 
10.80
%
 



 
Total Capital
11.82
%
 
11.94
%
 



 
Leverage
9.02
%
 
9.09
%
 



 
NM - Not meaningful
 
 
 
 
 
 
 
 
* Amount is less than one percent.
 
 
 
 
 
 
 
 
(a) 1Q19 common dividends paid April 1, 2019; 4Q18 common dividends paid January 2, 2019.
(b) Regulatory capital ratios calculated under the Basel III risk-based capital rules as phased-in; current quarter is an estimate.

5




FHN CONSOLIDATED INCOME STATEMENT
Quarterly, Unaudited
 
 
 
 

 
 

 
 

 
 

 
1Q19 Changes vs.
(Dollars in thousands, except per share data)
1Q19

 
4Q18

 
3Q18

 
2Q18

 
1Q18

 
4Q18
1Q18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
400,615

 
$
401,186

 
$
393,669

 
$
387,811

 
$
363,355

 
*

 
10

%
Less: interest expense
106,107

 
98,674

 
87,969

 
76,879

 
62,182

 
8

%
71

%
Net interest income
294,508

 
302,512

 
305,700

 
310,932

 
301,173

 
(3
)
%
(2
)
%
Provision/(provision credit) for loan losses
9,000

 
6,000

 
2,000

 

 
(1,000
)
 
50

%
NM

 
Net interest income after provision for loan losses
285,508

 
296,512

 
303,700

 
310,932

 
302,173

 
(4
)
%
(6
)
%
Noninterest income:
 

 
 

 
 

 
 

 
 

 


 



Fixed income (a)
53,749

 
39,866

 
44,813

 
37,697

 
45,506

 
35

%
18

%
Deposit transactions and cash management (b)
31,621

 
25,422

 
35,792

 
36,083

 
35,984

 
24

%
(12
)
%
Brokerage, management fees and commissions
12,633

 
13,380

 
14,200

 
13,740

 
13,483

 
(6
)
%
(6
)
%
Trust services and investment management
7,026

 
6,959

 
7,438

 
8,132

 
7,277

 
1

%
(3
)
%
Bankcard income
6,015

 
6,760

 
6,878

 
6,635

 
6,445

 
(11
)
%
(7
)
%
Bank-owned life insurance
4,402

 
4,852

 
4,337

 
5,773

 
3,993

 
(9
)
%
10

%
Securities gains/(losses), net (c)
31

 
(28
)
 
212,859

 
31

 
86

 
NM

 
(64
)
%
Other (d)
25,568

 
13,063

 
22,655

 
19,434

 
23,243

 
96

%
10

%
Total noninterest income
141,045

 
110,274

 
348,972

 
127,525

 
136,017

 
28

%
4

%
Adjusted gross income after provision for loan losses
426,553

 
406,786

 
652,672

 
438,457

 
438,190

 
5

%
(3
)
%
Noninterest expense:
 

 
 

 
 

 
 

 
 

 


 



Employee compensation, incentives, and benefits (e)
177,925

 
156,240

 
164,839

 
165,890

 
171,254

 
14

%
4

%
Repurchase and foreclosure provision (f)
(455
)
 
(153
)
 
(562
)
 
(252
)
 
(72
)
 
NM

 
NM

 
Legal fees
2,831

 
3,479

 
2,541

 
2,784

 
2,345

 
(19
)
%
21

%
Professional fees (g)
12,299

 
8,842

 
9,270

 
15,415

 
12,272

 
39

%
*

 
Occupancy
20,693

 
22,053

 
20,002

 
22,503

 
20,451

 
(6
)
%
1

%
Computer software
15,139

 
14,656

 
15,693

 
15,123

 
15,132

 
3

%
*

 
Contract employment and outsourcing
3,371

 
4,248

 
4,314

 
5,907

 
4,053

 
(21
)
%
(17
)
%
Operations services
11,488

 
12,945

 
13,121

 
14,653

 
15,561

 
(11
)
%
(26
)
%
Equipment rentals, depreciation, and maintenance
8,829

 
8,983

 
9,423

 
10,708

 
10,018

 
(2
)
%
(12
)
%
FDIC premium expense (h)
4,273

 
5,200

 
7,850

 
9,978

 
8,614

 
(18
)
%
(50
)
%
Advertising and public relations
7,242

 
7,718

 
8,365

 
5,070

 
3,599

 
(6
)
%
NM

 
Communications and courier
6,453

 
7,256

 
7,014

 
7,530

 
8,232

 
(11
)
%
(22
)
%
Amortization of intangible assets
6,216

 
6,461

 
6,460

 
6,460

 
6,474

 
(4
)
%
(4
)
%
Other (d)
19,786

 
24,004

 
25,701

 
50,999

 
35,332

 
(18
)
%
(44
)
%
Total noninterest expense
296,090

 
281,932

 
294,031

 
332,768

 
313,265

 
5

%
(5
)
%
Income before income taxes
130,463

 
124,854

 
358,641

 
105,689

 
124,925

 
4

%
4

%
Provision for income taxes (i)
27,058

 
24,049

 
83,925

 
19,697

 
29,931

 
13

%
(10
)
%
Net income/(loss)
103,405

 
100,805

 
274,716

 
85,992

 
94,994

 
3

%
9

%
Net income attributable to noncontrolling interest
2,820

 
2,910

 
2,883

 
2,852

 
2,820

 
(3
)
%
*

 
Net income/(loss) attributable to controlling interest
100,585

 
97,895

 
271,833

 
83,140

 
92,174

 
3

%
9

%
Preferred stock dividends
1,550

 
1,550

 
1,550

 
1,550

 
1,550

 
*

 
*

 
Net income/(loss) available to common shareholders
$
99,035

 
$
96,345

 
$
270,283

 
$
81,590

 
$
90,624

 
3

%
9

%
Common Stock Data
 

 
 

 
 

 
 

 
 

 


 



EPS (c)
$
0.31

 
$
0.30

 
$
0.83

 
$
0.25

 
$
0.28

 
3

%
11

%
Basic shares (thousands)
317,435

 
321,505

 
324,406

 
325,153

 
326,489

 
(1
)
%
(3
)
%
Diluted EPS
$
0.31

 
$
0.30

 
$
0.83

 
$
0.25

 
$
0.27

 
3

%
15

%
Diluted shares (thousands)
319,581

 
323,885

 
327,252

 
328,426

 
330,344

 
(1
)
%
(3
)
%
Key Ratios & Other
 
 
 

 
 

 
 

 
 

 
 

 
 
 
Return on average assets (annualized) (c) (j)
1.03
%
 
0.99
%
 
2.72
%
 
0.86
%
 
0.95
%
 
 

 
 

 
Return on average common equity (“ROCE”) (annualized) (c) (j)
9.09
%
 
8.81
%
 
25.41
%
 
7.86
%
 
8.79
%
 
 

 
 

 
Return on average tangible common equity (“ROTCE”) (annualized) (c) (j) (k)
14.17
%
 
13.80
%
 
40.51
%
 
12.63
%
 
14.06
%
 
 

 
 

 
Fee income to total revenue (j)
32.38
%
 
26.72
%
 
30.81
%
 
29.08
%
 
31.10
%
 
 

 
 

 
Efficiency ratio (j)
67.99
%
 
68.30
%
 
66.55
%
 
75.90
%
 
71.67
%
 
 

 
 

 
Average full time equivalent employees
5,524

 
5,563

 
5,623

 
5,873

 
5,835

 
 

 
 

 
NM - Not meaningful
* Amount is less than one percent.
(a)
3Q18 includes a $3.8 million gain from the reversal of a previous valuation adjustment due to sales of TRUPS loans.
(b)
4Q18 includes an $8.7 million unfavorable adjustment related to the return of excess fees received on Capital Bank debit card transactions.
(c)
3Q18 includes a pre-tax gain of $212.9 million from the sale of Visa Class B Shares which impacts certain performance measures in 3Q18.
(d)
Refer to the Other Income and Other Expense table on page 7 for additional information.
(e)
1Q19 includes $6.5 million of severance-related costs associated with efficiency initiatives. 1Q19 and 4Q18 include $6.2 million and $(7.1) million, respectively, of deferred compensation expense.
(f) Expense reversals driven by the settlements/recoveries of certain repurchase claims.
(g)
1Q19 includes $4.3 million related to efficiency initiatives.
(h) 4Q18 decrease due to the end of the FDIC assessment surcharge.
(i)
3Q18 reflects the tax effect on the gain on the sale of Visa Class B Shares.
(j)
See Glossary of Terms for definitions of Key Ratios.
(k)
This non-GAAP measure is reconciled to ROCE (GAAP) in the Non-GAAP to GAAP reconciliation on page 21 of this financial supplement.


6




FHN OTHER INCOME AND OTHER EXPENSE
Quarterly, Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
1Q19 Changes vs.
(Thousands)
 
1Q19

 
4Q18

 
3Q18

 
2Q18

 
1Q18

 
4Q18
1Q18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
ATM and interchange fees
 
$
3,241

 
$
3,411

 
$
3,263

 
$
3,413

 
$
3,267

 
(5
)
%
(1
)
%
Dividend income
 
2,313

 
2,425

 
2,757

 
3,124

 
2,249

 
(5
)
%
3

%
Electronic banking fees
 
1,271

 
1,393

 
1,309

 
1,228

 
1,204

 
(9
)
%
6

%
Letter of credit fees
 
1,368

 
1,447

 
1,307

 
1,295

 
1,249

 
(5
)
%
10

%
Mortgage banking
 
1,886

 
3,077

 
2,533

 
2,431

 
2,546

 
(39
)
%
(26
)
%
Deferred compensation (a)
 
5,474

 
(6,124
)
 
1,458

 
991

 
451

 
NM

 
NM

 
Insurance commissions
 
624

 
467

 
396

 
476

 
757

 
34

%
(18
)
%
Other service charges
 
3,869

 
3,513

 
3,758

 
3,728

 
4,123

 
10

%
(6
)
%
Gain/(loss) on extinguishment of debt
 
(1
)
 
(14
)
 
(1
)
 

 

 
93

%
NM

 
Other (b)
 
5,523

 
3,468

 
5,875

 
2,748

 
7,397

 
59

%
(25
)
%
Total
 
$
25,568

 
$
13,063

 
$
22,655

 
$
19,434

 
$
23,243

 
96

%
10

%
 
 
 
 
 
 
 
 
 
 
 
 





 
Other Expense
 
 
 
 

 
 

 
 

 
 

 





 
Litigation and regulatory matters (c)
 
$
13

 
$
35

 
$
(1,541
)
 
$
16

 
$
2,134

 
(63
)
%
(99
)
%
Tax credit investments
 
675

 
1,126

 
1,370

 
1,079

 
1,137

 
(40
)
%
(41
)
%
Travel and entertainment
 
2,712

 
4,340

 
3,988

 
5,131

 
2,983

 
(38
)
%
(9
)
%
Employee training and dues
 
1,457

 
1,908

 
1,682

 
1,849

 
1,779

 
(24
)
%
(18
)
%
Customer relations
 
1,599

 
1,834

 
1,328

 
1,358

 
1,063

 
(13
)
%
50

%
Miscellaneous loan costs
 
1,027

 
1,012

 
543

 
1,035

 
1,142

 
1

%
(10
)
%
Supplies
 
1,804

 
1,459

 
1,635

 
1,987

 
1,836

 
24

%
(2
)
%
OREO
 
(366
)
 
456

 
1,256

 
810

 
108

 
NM

 
NM

 
Other insurance and taxes
 
2,694

 
1,506

 
2,761

 
2,752

 
2,665

 
79

%
1

%
Non-service components of net periodic pension and post retirement cost (d)
 
432

 
1,632

 
1,585

 
1,530

 
504

 
(74
)
%
(14
)
%
Other (e)
 
7,739

 
8,696

 
11,094

 
33,452

 
19,981

 
(11
)
%
(61
)
%
Total
 
$
19,786

 
$
24,004

 
$
25,701

 
$
50,999

 
$
35,332

 
(18
)
%
(44
)
%
NM - Not meaningful
(a)
Amounts driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense.
(b)
4Q18 includes a $1.8 million negative valuation adjustment on HFS consumer loans included in the Non-Strategic segment; 3Q18 and 1Q18 include $.8 million and $3.3 million, respectively, of gains on the sales of buildings.
(c)
3Q18 includes a $1.6 million expense reversal related to a recovery of prior litigation losses within the Regional Banking segment.
(d)
1Q18 includes a $1.0 million favorable adjustment related to benefits received.
(e)
2Q18 includes $4.1 million of valuation adjustments associated with derivatives related to prior sales of Visa Class B shares.

















                        

7




FHN CONSOLIDATED PERIOD-END BALANCE SHEET
Quarterly, Unaudited 
 
 
 
 
 
 
 
 
 
 
 
1Q19 Changes vs.
(Thousands)
1Q19

 
4Q18

 
3Q18

 
2Q18

 
1Q18

 
4Q18
1Q18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 

 
 

 
 

 
 

 
 

 
 

 
Investment securities
$
4,626,322

 
$
4,636,470

 
$
4,618,383

 
$
4,734,411

 
$
4,836,155

 
*

 
(4
)
%
Loans held-for-sale (a)
594,662

 
679,149

 
725,651

 
692,659

 
770,412

 
(12
)
%
(23
)
%
Loans, net of unearned income
27,990,048

 
27,535,532

 
27,350,214

 
27,701,740

 
27,249,793

 
2

%
3

%
Federal funds sold
167,602

 
237,591

 
113,722

 
91,303

 
62,541

 
(29
)
%
NM

 
Securities purchased under agreements to resell
474,679

 
386,443

 
687,437

 
782,765

 
910,670

 
23

%
(48
)
%
Interest-bearing cash (b)
1,013,254

 
1,277,611

 
531,681

 
750,634

 
309,351

 
(21
)
%
NM

 
Trading securities
1,681,727

 
1,448,168

 
1,930,991

 
1,649,470

 
1,759,430

 
16

%
(4
)
%
Total earning assets
36,548,294

 
36,200,964

 
35,958,079

 
36,402,982

 
35,898,352

 
1

%
2

%
Cash and due from banks
570,589

 
781,291

 
642,051

 
602,952

 
459,820

 
(27
)
%
24

%
Fixed income receivables (c)
46,782

 
38,861

 
177,802

 
68,148

 
94,036

 
20

%
(50
)
%
Goodwill
1,432,788

 
1,432,787

 
1,409,822

 
1,409,276

 
1,398,501

 
*

 
2

%
Other intangible assets, net
148,818

 
155,034

 
161,495

 
167,955

 
174,415

 
(4
)
%
(15
)
%
Premises and equipment, net
484,494

 
494,041

 
506,453

 
525,175

 
531,981

 
(2
)
%
(9
)
%
Other real estate owned ("OREO")
23,396

 
25,290

 
28,628

 
29,712

 
35,715

 
(7
)
%
(34
)
%
Allowance for loan losses
(184,911
)
 
(180,424
)
 
(185,959
)
 
(185,462
)
 
(187,194
)
 
2

%
(1
)
%
Derivative assets
118,128

 
81,475

 
54,476

 
122,056

 
114,348

 
45

%
3

%
Other assets (d)
1,910,625

 
1,802,939

 
1,883,077

 
1,934,001

 
1,943,221

 
6

%
(2
)
%
Total assets
$
41,099,003

 
$
40,832,258

 
$
40,635,924

 
$
41,076,795

 
$
40,463,195

 
1

%
2

%
 
 
 
 
 
 
 
 
 
 
 


 


 
Liabilities and Equity:
 
 
 

 
 

 
 

 
 

 


 


 
Deposits:
 
 
 

 
 

 
 

 
 

 


 


 
Consumer interest
$
13,707,310

 
$
13,327,104

 
$
12,800,892

 
$
12,780,195

 
$
12,674,251

 
3

%
8

%
Commercial interest
6,729,999

 
6,172,159

 
5,735,486

 
5,547,510

 
5,816,992

 
9

%
16

%
Market-indexed (e)
4,062,531

 
5,042,412

 
4,445,826

 
4,412,272

 
4,346,862

 
(19
)
%
(7
)
%
Total interest-bearing deposits
24,499,840

 
24,541,675

 
22,982,204

 
22,739,977

 
22,838,105

 
*

 
7

%
Noninterest-bearing deposits
7,963,048

 
8,141,317

 
8,025,881

 
8,237,890

 
7,980,846

 
(2
)
%
*

 
Total deposits
32,462,888

 
32,682,992

 
31,008,085

 
30,977,867

 
30,818,951

 
(1
)
%
5

%
Federal funds purchased
339,360

 
256,567

 
437,474

 
351,655

 
392,714

 
32

%
(14
)
%
Securities sold under agreements to repurchase
745,788

 
762,592

 
678,510

 
713,152

 
672,154

 
(2
)
%
11

%
Trading liabilities
429,669

 
335,380

 
739,694

 
743,721

 
827,362

 
28

%
(48
)
%
Other short-term borrowings (f)
140,832

 
114,764

 
1,069,912

 
1,836,852

 
1,332,141

 
23

%
(89
)
%
Term borrowings (g)
1,177,926

 
1,170,963

 
1,200,134

 
1,227,281

 
1,214,967

 
1

%
(3
)
%
Fixed income payables (c)
100,290

 
9,572

 
36,939

 
14,739

 
6,167

 
NM

 
NM

 
Derivative liabilities
107,123

 
133,713

 
170,324

 
135,349

 
121,394

 
(20
)
%
(12
)
%
Other liabilities (d)
748,606

 
580,335

 
552,921

 
526,430

 
504,817

 
29

%
48

%
Total liabilities
36,252,482

 
36,046,878

 
35,893,993

 
36,527,046

 
35,890,667

 
1

%
1

%
Equity:
 
 
 

 
 

 
 

 
 

 






Common stock
197,101

 
199,108

 
202,464

 
203,127

 
204,496

 
(1
)
%
(4
)
%
Capital surplus
2,983,948

 
3,029,425

 
3,101,102

 
3,113,612

 
3,155,407

 
(2
)
%
(5
)
%
Undivided profits
1,595,568

 
1,542,408

 
1,484,959

 
1,254,069

 
1,211,655

 
3

%
32

%
Accumulated other comprehensive loss, net
(321,151
)
 
(376,616
)
 
(437,649
)
 
(412,114
)
 
(390,085
)
 
(15
)
%
(18
)
%
Preferred stock
95,624

 
95,624

 
95,624

 
95,624

 
95,624

 
*

 
*

 
Noncontrolling interest (h)
295,431

 
295,431

 
295,431

 
295,431

 
295,431

 
*

 
*

 
Total equity
4,846,521

 
4,785,380

 
4,741,931

 
4,549,749

 
4,572,528

 
1

%
6

%
Total liabilities and equity
$
41,099,003

 
$
40,832,258

 
$
40,635,924

 
$
41,076,795

 
$
40,463,195

 
1

%
2

%
Certain previously reported amounts have been reclassified to agree with current presentation.
NM - Not meaningful
*Amount is less than one percent.
(a)
1Q19 includes $495.5 million of SBA and USDA loans, $75.0 million of mortgage loans, and $24.2 million of other consumer loans; 2Q18 decrease driven by the sales of approximately $120 million UPB of loans.     
(b)
Includes excess balances held at Fed.
(c)
Period-end balances fluctuate based on the level of pending unsettled trades.
(d)
1Q19 increase largely driven by the adoption of ASU 2016-02, "Leases" which resulted in approximately $180 million of lease assets and approximately $200 million of lease liabilities being added to the balance sheet.
(e)
Market-indexed deposits are tied to an index not administered by FHN and are comprised of insured network deposits, correspondent banking deposits, and trust/sweep deposits.
(f)
Balance fluctuates largely based on the level of FHLB borrowings as a result of loan demand and deposit levels.
(g)
4Q18 and 3Q18 decreases include the retirement of $35.1 million and $10.3 million, respectively, of TRUPS debt.
(h)
Consists of preferred stock of subsidiaries.




8




FHN CONSOLIDATED AVERAGE BALANCE SHEET
Quarterly, Unaudited 
 
 
 
 
 
 
 
 
 
 
 
1Q19 Changes vs.
(Thousands)
1Q19

 
4Q18

 
3Q18

 
2Q18

 
1Q18

 
4Q18
1Q18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 

 
 

 
 

 
 

 
 

 
 

 
Earning assets:
 
 
 

 
 

 
 

 
 

 
 

 
 

 
Loans, net of unearned income:
 
 
 

 
 

 
 

 
 

 
 

 
 

 
Commercial, financial, and industrial (C&I)
$
16,428,088

 
$
15,952,608

 
$
16,038,920

 
$
15,958,162

 
<