UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 13, 2017

 

 

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	38103
MEMPHIS, TENNESSEE	(Zip Code)
(Address of principal executive office)

 

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))

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”) Financial Supplement and Investor Slide Presentation for the quarter ended March 31, 2017, which was 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 Exhibit

 

Certain measures are included in the exhibit 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 exhibit 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.

 

The non-GAAP measures presented in the exhibit include: return on average tangible common equity (“ROTCE”); tangible common equity (“TCE”) to tangible assets (“TA”); tangible book value per common share; and earnings per share measures reported at the segment level.

 

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 portion of the exhibit, and at the end of the Investor Slide Presentation.

 

ITEM 9.01. Financial Statements and Exhibits.

 

(d)

Exhibits

 

The following exhibit is furnished pursuant to Items 2.02 and 7.01, is 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
99.1		First Horizon National Corporation Financial Supplement and Investor Slide Presentation for the quarter ended March 31, 2017.

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
	(Registrant)
Date: April 13, 2017	By:	/s/ William C. Losch III
	William C. Losch III
	Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

 

The following exhibit is furnished pursuant to Items 2.02 and 7.01, is not to be considered “filed” under the 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
99.1		First Horizon National Corporation Financial Supplement and Investor Slide Presentation for the quarter ended March 31, 2017.

Exhibit 99.1

 

 

FIRST QUARTER 2017

 

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	3
Performance Highlights	4
Consolidated Results
Income Statement
Income Statement	6
Other Income and Other Expense	7
Balance Sheet
Period End Balance Sheet	8
Average Balance Sheet	9
Net Interest Income	10
Average Balance Sheet: Yields and Rates	11
Capital Highlights	12
Business Segment Detail
Segment Highlights	13
Regional Banking	14
Fixed Income and Corporate	15
Non-Strategic	16
Asset Quality
Asset Quality: Consolidated	17
Asset Quality: Regional Banking and Corporate	19
Asset Quality: Non-Strategic	20
Portfolio Metrics	21
Non-GAAP to GAAP Reconciliation	22
Glossary of Terms	23
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 press 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.

 

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 per common share.

 

Refer to the tabular reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items on page 22 of this financial supplement.

FIRST HORIZON NATIONAL CORPORATION SEGMENT STRUCTURE

 

FHN PERFORMANCE HIGHLIGHTS

First Quarter 2017 vs. Fourth Quarter 2016

Consolidated

•

Net income available to common shareholders was $54.0 million, or $.23 per diluted share in first quarter, compared to $53.3 million, or $.23 per diluted share in fourth quarter

•

Net interest income (“NII”) decreased to $189.7 million in first quarter from $195.6 million in fourth quarter; Net Interest Margin (“NIM”) decreased to 2.92 percent in first quarter from 3.00 percent in prior quarter

•

The decrease in NII was driven by lower average balances of loans to mortgage companies, fewer days in first quarter relative to the prior quarter, lower average balances of fixed income trading inventory and run-off of the non-strategic loan portfolios

•

NII was favorably impacted by the positive impact of higher short-term market rates and loan growth within the Regional banking other commercial portfolios

•

The decrease in NIM was primarily due to an increase in average excess cash held at the Fed during first quarter relative to fourth quarter, somewhat offset by higher short-term market rates

•

Noninterest income (including securities gains) was $116.9 million in first quarter compared to $124.1 million in prior quarter

•

The decrease was largely driven by lower fees within the regional banking segment, as well as a decrease in fixed income revenues

•

Noninterest expense decreased to $222.2 million in first quarter from $237.9 million in fourth quarter driven by a net decrease in loss accruals related to legal matters and lower personnel-related expenses, as well as declines in several other expense categories related to continued emphasis on expense discipline

•

Period-end loans were $19.1 billion and $19.6 billion in first and fourth quarter, respectively; average loans decreased 3 percent to $18.8 billion in first quarter

•

Period-end deposits increased to $23.5 billion in first quarter from $22.7 billion in fourth quarter; average deposits increased 2 percent linked quarter to $22.8 billion in first quarter

 

Regional Banking

•

Pre-tax income was $101.2 million in first quarter compared to $98.5 million in fourth quarter; pre-provision net revenue was $104.3 million and $103.2 million in first and fourth quarters, respectively

•

Period-end loans were $17.5 billion and $17.9 billion in first and fourth quarters, respectively; average loans decreased 3 percent to $17.2 billion in first quarter

•

The decrease in period-end and average loans was primarily driven by a decrease in loans to mortgage companies, somewhat offset by increases in other commercial loan portfolios

•

Period-end deposits increased to $20.5 billion in first quarter from $19.3 billion in fourth quarter; average deposits increased 3 percent to $19.7 billion

•

The increase in period-end and average deposits was primarily driven by a seasonal increase in public funds and an increase in priority savings due to a promotional campaign, somewhat offset by a decrease in insured network deposits

•

NII decreased to $193.4 million in first quarter from $200.7 million in fourth quarter

•

The decrease in NII was largely the result of lower average balances of loans to mortgage companies and fewer days in first quarter relative to the prior quarter, somewhat offset by a higher earnings credit on deposits and higher average balances of other commercial loans

•

Provision expense was $3.1 million in first quarter compared to $4.7 million in the prior quarter reflecting continued strong performance in both the commercial and consumer portfolios

•

Reserves increased $1.9 million from fourth quarter, primarily within the consumer portfolio, while net charge-offs were $1.2 million in first quarter compared to $2.0 million in fourth quarter

•

Noninterest income was $59.0 million in first quarter compared to $63.3 million in fourth quarter

•

The decrease in noninterest income was largely driven by lower deposit fees, which were primarily attributable to lower non-sufficient funds (“NSF”) fees from the combined effects of a seasonable downward trend and a modification of billing practices. Noninterest income was also negatively impacted by lower fee income associated with derivative sales

•

Noninterest expense decreased to $148.1 million in first quarter from $160.9 million in fourth quarter

•

The decrease was driven by a decline in loss accruals related to legal matters, as well as declines in most other expense categories due to continued emphasis on expense discipline

 

Fixed Income

•

Pre-tax income was $3.3 million in first quarter compared to $5.9 million in fourth quarter

•

NII was $1.2 million in first quarter compared to $2.5 million in fourth quarter

•

The decline in NII was due to lower net inventory positions driven by reduced customer activity

•

Noninterest income decreased to $50.8 million in first quarter from $52.1 million in the prior quarter

•

Fixed income product revenue was $42.7 million in first quarter compared to $43.8 million in fourth quarter

•

Fixed income product average daily revenue (“ADR”) was $689 thousand and $718 thousand in first and fourth quarters, respectively

•

Other product revenue was $8.1 million in first quarter compared to $8.3 million in fourth quarter

•

Noninterest expense remained flat at $48.7 million in first quarter as a decrease in variable compensation expense was offset by the seasonal first quarter FICA reset and an increase in legal fees

FHN PERFORMANCE HIGHLIGHTS (continued)
First Quarter 2017 vs. Fourth Quarter 2016 (continued)

Corporate

•

Pre-tax loss was $25.5 million in first quarter compared to pre-tax loss of $27.4 million in prior quarter

•

NII was negative $14.1 million and negative $17.5 million in first and fourth quarter, respectively

•

Estimated effective duration of the securities portfolio was 4.5 years in first quarter compared to 4.8 years in fourth quarter

•

Noninterest income (including net securities gains) was $5.5 million in first quarter compared to $4.7 million in fourth quarter

•

Noninterest expense was $16.9 million in first quarter compared to $14.6 million in prior quarter

 

Non-Strategic

•

Pre-tax income was $6.5 million in first quarter compared to $4.8 million in fourth quarter

•

NII was $9.3 million and $9.8 million in first and fourth quarter, respectively

•

The provision credit was $4.1 million in first quarter compared to a provision credit of $4.7 million in fourth quarter

•

The level of provision continues to reflect declining balances combined with stable performance within the legacy portfolio

•

Noninterest income was $1.7 million in first quarter compared to $4.0 million in prior quarter

•

Fourth quarter included a $1.5 million gain related to the reversal of a contingency accrual associated with prior sales of MSR

•

Noninterest expense decreased to $8.6 million in first quarter from $13.7 million in fourth quarter driven by a $2.8 million decrease in legal fees and a $2.3 million net decline in loss accruals related to legal matters

 

Asset Quality

•

Allowance for loan losses decreased to $202.0 million in first quarter from $202.1 million in fourth quarter; the allowance to loans ratio increased 3 bps to 106 basis points in first quarter

•

Reserves for the consumer portfolio decreased $.8 million which was partially offset by a $.7 million increase in commercial portfolio reserves

•

Net recoveries were $.9 million in first quarter compared to $.5 million in fourth quarter

•

Regional bank net charge-offs decreased $.8 million to $1.2 million in first quarter due to improvements in both commercial and consumer portfolios

•

Non-strategic net recoveries decreased $.4 million to $2.1 million in first quarter; the decrease was driven by the consumer real estate portfolio

•

Nonperforming loans (“NPLs”), excluding loans held-for-sale, decreased to $143.4 million in first quarter from $145.6 million in fourth quarter; the decrease was largely driven by the commercial portfolio

•

Nonperforming assets (“NPAs”), excluding loans held-for-sale, were $153.7 million compared to $156.9 million

•

30+ delinquencies as a percentage of total loans increased to 39 basis points in first quarter compared to 34 basis points in fourth quarter; the increase was primarily driven by a few credits within the C&I portfolio, one of which has become current in early second quarter 2017

•

TDRs decreased to $337.2 million in first quarter from $354.5 million in prior quarter

 

Taxes

•

The effective tax rates for first and fourth quarters were 31.66 percent and 29.37 percent, respectively

•

The rates reflect the favorable effect from permanent benefits. Permanent benefits primarily consist of tax credit investments, life insurance, and tax-exempt interest

 

Capital and Liquidity

•

Declared $.09 per common share quarterly dividend in first quarter, aggregating $21.0 million, which was paid on April 3, 2017

•

Declared aggregate preferred quarterly dividend of $1.6 million in first quarter which was paid on April 10, 2017

•

There were no repurchases of shares in first quarter under the current share repurchase program (unrelated to employee stock award programs); $189.7 million remains in the stock purchase authorization first announced in 2014, currently scheduled to expire January 31, 2018

•

Capital ratios (regulatory capital ratios calculated under the Basel III risk-based capital rules as phased-in; current quarter is an estimate)

•

Total equity to total assets (GAAP) of 9.25 percent in first quarter compared to 9.47 percent in prior quarter

•

Tangible common equity to tangible assets (Non-GAAP) of 7.27 percent in first quarter compared to 7.42 percent in prior quarter

•

Common Equity Tier 1 of 10.15 percent in first quarter compared to 9.94 percent in prior quarter

•

Tier 1 of 11.30 percent in first quarter compared to 11.17 percent in prior quarter

•

Total Capital of 12.33 percent in first quarter compared to 12.24 percent in prior quarter

•

Leverage of 9.31 percent in first quarter compared to 9.35 percent in prior quarter

FHN CONSOLIDATED INCOME STATEMENT

Quarterly, Unaudited

																						1Q17 Changes vs.
(Dollars in thousands, except per share data)		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Interest income		$	218,811			$	219,897			$	206,972			$	197,376			$	193,664				*				13	%
Less: interest expense			29,103				24,346				21,777				21,112				21,590				20	%			35	%
Net interest income			189,708				195,551				185,195				176,264				172,074				(3	)%			10	%
Provision/(provision credit) for loan losses			(1,000	)			—				4,000				4,000				3,000				NM				NM
Net interest income after provision for loan losses			190,708				195,551				181,195				172,264				169,074				(2	)%			13	%
Noninterest income:
Fixed income			50,678				51,923				71,748				77,913				66,977				(2	)%			(24	)%
Deposit transactions and cash management			24,565				27,504				27,221				26,991				26,837				(11	)%			(8	)%
Brokerage, management fees and commissions			11,906				11,003				10,828				10,665				10,415				8	%			14	%
Trust services and investment management			6,653				7,053				6,885				7,224				6,565				(6	)%			1	%
Bankcard income (a)			5,455				6,353				6,260				6,558				5,259				(14	)%			4	%
Bank-owned life insurance			3,247				3,558				3,997				3,743				3,389				(9	)%			(4	)%
Securities gains/(losses), net			44				(132	)			(200	)			99				1,574				NM				(97	)%
Other (b)			14,391				16,815				21,806				12,321				13,289				(14	)%			8	%
Total noninterest income			116,939				124,077				148,545				145,514				134,305				(6	)%			(13	)%
Adjusted gross income after provision for loan losses			307,647				319,628				329,740				317,778				303,379				(4	)%			1	%
Noninterest expense:
Employee compensation, incentives, and benefits			134,932				137,324				145,103				143,370				137,151				(2	)%			(2	)%
Repurchase and foreclosure provision (c)			(238	)			(1,104	)			(218	)			(31,400	)			—				78	%			NM
Legal fees			5,283				6,038				4,750				5,891				4,879				(13	)%			8	%
Professional fees			4,746				4,827				4,859				4,284				5,199				(2	)%			(9	)%
Occupancy			12,340				12,818				12,722				12,736				12,604				(4	)%			(2	)%
Computer software (d)			10,799				11,909				10,400				11,226				11,587				(9	)%			(7	)%
Contract employment and outsourcing			2,958				2,696				2,443				2,497				2,425				10	%			22	%
Operations services			10,875				10,913				10,518				10,521				9,900				*				10	%
Equipment rentals, depreciation, and maintenance			6,351				7,959				6,085				7,182				6,159				(20	)%			3	%
FDIC premium expense			5,739				6,095				5,721				4,848				4,921				(6	)%			17	%
Advertising and public relations (e)			4,601				6,093				6,065				4,481				4,973				(24	)%			(7	)%
Communications and courier			3,800				3,593				3,883				3,039				3,750				6	%			1	%
Amortization of intangible assets			1,232				1,300				1,299				1,299				1,300				(5	)%			(5	)%
Other (b)			18,787				27,436				19,928				46,848				22,079				(32	)%			(15	)%
Total noninterest expense			222,205				237,897				233,558				226,822				226,927				(7	)%			(2	)%
Income before income taxes			85,442				81,731				96,182				90,956				76,452				5	%			12	%
Provision for income taxes			27,054				24,008				28,547				30,016				24,239				13	%			12	%
Net income			58,388				57,723				67,635				60,940				52,213				1	%			12	%
Net income attributable to noncontrolling interest			2,820				2,879				2,883				2,852				2,851				(2	)%			(1	)%
Net income attributable to controlling interest			55,568				54,844				64,752				58,088				49,362				1	%			13	%
Preferred stock dividends			1,550				1,550				1,550				1,550				1,550				*				*
Net income available to common shareholders		$	54,018			$	53,294			$	63,202			$	56,538			$	47,812				1	%			13	%
Common Stock Data
EPS		$	0.23			$	0.23			$	0.27			$	0.24			$	0.20				*				15	%
Basic shares (thousands)			233,076				232,731				231,856				231,573				234,651				*				(1	)%
Diluted EPS		$	0.23			$	0.23			$	0.27			$	0.24			$	0.20				*				15	%
Diluted shares (thousands)			236,855				235,590				234,092				233,576				236,666				1	%			*
Key Ratios & Other
Return on average assets (annualized) (f)			0.82	%			0.80	%			0.97	%			0.91	%			0.79	%
Return on average common equity (“ROE”) (annualized) (f)			9.40	%			9.00	%			10.80	%			10.04	%			8.53	%
Return on average tangible common equity (“ROTCE”) (annualized) (f) (g)			10.33	%			9.89	%			11.90	%			11.10	%			9.44	%
Fee income to total revenue (f)			38.13	%			38.84	%			44.54	%			45.21	%			43.55	%
Efficiency ratio (f)			72.47	%			74.40	%			69.94	%			70.51	%			74.45	%
Full time equivalent employees			4,258				4,248				4,246				4,228				4,241

NM - Not meaningful
* Amount is less than one percent.
(a)	2Q16 increase driven by a significant new relationship.
(b)	Refer to the Other Income and Other Expense table on page 7 for additional information.
(c)	Expense reversals driven by the settlements/recoveries of certain repurchase claims.
(d)	4Q16 expense increase largely driven by investments in a new digital banking platform.
(e)	4Q16 includes $1.1 million related to CRA initiatives; 3Q16 increase related to a promotional branding campaign.
(f)	See Glossary of Terms for definitions of Key Ratios.
(g)	This non-GAAP measure is reconciled to ROE (GAAP) in the Non-GAAP to GAAP reconciliation on page 22 of this financial supplement.

FHN OTHER INCOME AND OTHER EXPENSE

Quarterly, Unaudited

																						1Q17 Changes vs.
(Thousands)		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Other Income
ATM and interchange fees		$	2,778			$	3,047			$	3,081			$	2,879			$	2,958				(9	)%			(6	)%
Electronic banking fees			1,323				1,301				1,398				1,381				1,397				2	%			(5	)%
Letter of credit fees			1,036				946				981				1,115				1,061				10	%			(2	)%
Mortgage banking (a)			1,261				2,820				5,524				598				1,273				(55	)%			(1	)%
Deferred compensation (b)			1,827				863				1,038				795				329				NM				NM
Insurance commissions			883				680				1,262				552				487				30	%			81	%
Other service charges			2,984				3,018				3,004				2,996				2,713				(1	)%			10	%
Other (c)			2,299				4,140				5,518				2,005				3,071				(44	)%			(25	)%
Total		$	14,391			$	16,815			$	21,806			$	12,321			$	13,289				(14	)%			8	%
Other Expense
Litigation and regulatory matters		$	(292	)		$	4,684			$	260			$	26,000			$	(475	)			NM				39	%
Tax credit investments			942				1,024				788				831				706				(8	)%			33	%
Travel and entertainment			2,348				3,240				2,478				2,495				2,062				(28	)%			14	%
Employee training and dues			1,543				1,603				1,360				1,338				1,390				(4	)%			11	%
Customer relations			1,336				1,451				1,442				1,483				1,879				(8	)%			(29	)%
Miscellaneous loan costs			622				628				676				565				717				(1	)%			(13	)%
Supplies			863				1,320				1,158				930				1,026				(35	)%			(16	)%
Foreclosed real estate			204				648				815				(432	)			(258	)			(69	)%			NM
Other insurance and taxes			2,390				1,939				2,625				3,014				3,313				23	%			(28	)%
Other (d)			8,831				10,899				8,326				10,624				11,719				(19	)%			(25	)%
Total		$	18,787			$	27,436			$	19,928			$	46,848			$	22,079				(32	)%			(15	)%

NM - Not meaningful
(a)	4Q16 includes a $1.5 million gain related to the reversal of a contingency accrual associated with prior sales of MSR; 3Q16 includes $4.4 million of gains primarily related to recoveries associated with prior legacy mortgage servicing sales.
(b)	Amounts driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense.
(c)	3Q16 includes a $1.8 million gain on the sales of properties.
(d)	2Q16 includes $2.5 million of negative valuation adjustments associated with derivatives related to prior sales of Visa Class B shares; 1Q16 includes $3.7 million of impairment related to branch closures.

FHN CONSOLIDATED PERIOD-END BALANCE SHEET

 

Quarterly, Unaudited

 

																						1Q17 Changes vs.
(Thousands)		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Assets:
Investment securities		$	3,953,632			$	3,957,846			$	4,041,934			$	4,023,576			$	4,028,731				*				(2	)%
Loans held-for-sale			105,456				111,248				155,215				117,976				116,270				(5	)%			(9	)%
Loans, net of unearned income			19,090,074				19,589,520				19,555,787				18,589,337				17,574,994				(3	)%			9	%
Federal funds sold			31,495				50,838				27,097				40,570				34,061				(38	)%			(8	)%
Securities purchased under agreements to resell			835,222				613,682				802,815				881,732				767,483				36	%			9	%
Interest-bearing cash (a)			2,106,597				1,060,034				219,834				321,743				951,920				99	%			NM
Trading securities			1,167,310				897,071				1,320,535				1,162,959				1,226,521				30	%			(5	)%
Total earning assets			27,289,786				26,280,239				26,123,217				25,137,893				24,699,980				4	%			10	%
Cash and due from banks			369,290				373,274				327,639				283,648				280,625				(1	)%			32	%
Fixed income receivables (b)			168,315				57,411				91,997				219,939				114,854				NM				47	%
Goodwill			191,371				191,371				191,371				191,307				191,307				*				*
Other intangible assets, net			19,785				21,017				22,317				23,616				24,915				(6	)%			(21	)%
Premises and equipment, net			290,497				289,385				279,178				279,676				274,347				*				6	%
Real estate acquired by foreclosure			15,144				16,237				18,945				20,053				24,521				(7	)%			(38	)%
Allowance for loan losses			(201,968	)			(202,068	)			(201,557	)			(199,807	)			(204,034	)			*				(1	)%
Derivative assets			98,120				121,654				160,736				196,989				165,007				(19	)%			(41	)%
Other assets			1,378,260				1,406,711				1,435,379				1,387,756				1,392,160				(2	)%			(1	)%
Total assets		$	29,618,600			$	28,555,231			$	28,449,222			$	27,541,070			$	26,963,682				4	%			10	%
Liabilities and Equity:
Deposits:
Savings		$	9,573,628			$	9,428,197			$	8,753,115			$	7,960,182			$	7,921,344				2	%			21	%
Other interest-bearing deposits			6,164,775				5,948,439				5,605,734				5,720,628				5,371,864				4	%			15	%
Time deposits			1,385,818				1,355,133				1,325,079				1,264,635				1,317,431				2	%			5	%
Total interest-bearing deposits			17,124,221				16,731,769				15,683,928				14,945,445				14,610,639				2	%			17	%
Noninterest-bearing deposits			6,355,620				5,940,594				5,890,252				5,684,732				5,717,195				7	%			11	%
Total deposits			23,479,841				22,672,363				21,574,180				20,630,177				20,327,834				4	%			16	%
Federal funds purchased			504,805				414,207				538,284				508,669				588,413				22	%			(14	)%
Securities sold under agreements to repurchase			406,354				453,053				341,998				451,129				425,217				(10	)%			(4	)%
Trading liabilities			848,190				561,848				702,226				789,540				738,653				51	%			15	%
Other short-term borrowings (c)			79,454				83,177				792,736				543,033				96,723				(4	)%			(18	)%
Term borrowings (d)			1,035,036				1,040,656				1,065,651				1,076,943				1,323,749				(1	)%			(22	)%
Fixed income payables (b)			21,116				21,002				68,897				90,400				56,399				1	%			(63	)%
Derivative liabilities			101,347				135,897				144,829				170,619				146,297				(25	)%			(31	)%
Other liabilities			401,997				467,944				475,839				588,636				617,449				(14	)%			(35	)%
Total liabilities			26,878,140				25,850,147				25,704,640				24,849,146				24,320,734				4	%			11	%
Equity:
Common stock			146,177				146,015				145,772				145,012				145,342				*				1	%
Capital surplus			1,391,777				1,386,636				1,376,319				1,362,528				1,371,397				*				1	%
Undivided profits			1,061,409				1,029,032				992,264				945,663				905,595				3	%			17	%
Accumulated other comprehensive loss, net			(249,958	)			(247,654	)			(160,828	)			(152,334	)			(170,441	)			1	%			47	%
Preferred stock			95,624				95,624				95,624				95,624				95,624				*				*
Noncontrolling interest (e)			295,431				295,431				295,431				295,431				295,431				*				*
Total equity			2,740,460				2,705,084				2,744,582				2,691,924				2,642,948				1	%			4	%
Total liabilities and equity		$	29,618,600			$	28,555,231			$	28,449,222			$	27,541,070			$	26,963,682				4	%			10	%

Certain previously reported amounts have been reclassified to agree with current presentation.

NM - Not meaningful

*Amount is less than one percent.

(a)	Includes excess balances held at Fed; 1Q17 increase largely driven by an inflow of customer deposits.
(b)	Period-end balances fluctuate based on the level of pending unsettled trades.
(c)	4Q16 decrease due to repayment of FHLB borrowings as a result of an inflow of deposits; 3Q16 and 2Q16 increase related to higher FHLB borrowings as a result of increased loan demand.
(d)	In 2Q16 $250 million of FTBNA subordinated notes matured.
(e)	Consists of preferred stock of subsidiaries.

FHN CONSOLIDATED AVERAGE BALANCE SHEET

Quarterly, Unaudited

 

																						1Q17 Changes vs.
(Thousands)		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Assets:
Earning assets:
Loans, net of unearned income:
Commercial, financial, and industrial (C&I)		$	11,381,258			$	11,987,562			$	11,281,691			$	10,451,954			$	9,994,084				(5	)%			14	%
Commercial real estate			2,176,355				2,089,314				1,997,121				1,901,592				1,765,435				4	%			23	%
Consumer real estate			4,491,786				4,545,646				4,601,420				4,662,172				4,732,968				(1	)%			(5	)%
Permanent mortgage			415,916				429,914				436,952				435,521				447,800				(3	)%			(7	)%
Credit card and other			348,123				361,311				362,166				360,874				353,661				(4	)%			(2	)%
Total loans, net of unearned income (a)			18,813,438				19,413,747				18,679,350				17,812,113				17,293,948				(3	)%			9	%
Loans held-for-sale			110,726				127,484				132,434				114,859				122,146				(13	)%			(9	)%
Investment securities:
U.S. treasuries			100				100				100				100				100				*				*
U.S. government agencies			3,735,472				3,810,207				3,844,103				3,814,059				3,790,568				(2	)%			(1	)%
States and municipalities			4,350				4,344				4,516				5,830				5,823				*				(25	)%
Corporate bonds			10,000				10,000				10,000				10,000				10,000				*				*
Other			186,670				186,452				186,632				186,812				185,638				*				1	%
Total investment securities			3,936,592				4,011,103				4,045,351				4,016,801				3,992,129				(2	)%			(1	)%
Trading securities			929,545				1,283,407				1,155,776				1,269,909				1,142,215				(28	)%			(19	)%
Other earning assets:
Federal funds sold			17,015				19,323				28,049				20,825				25,454				(12	)%			(33	)%
Securities purchased under agreements to resell			691,469				792,156				808,861				891,973				817,963				(13	)%			(15	)%
Interest-bearing cash (b)			2,117,498				711,485				491,164				475,881				1,009,739				NM				NM
Total other earning assets			2,825,982				1,522,964				1,328,074				1,388,679				1,853,156				86	%			52	%
Total earning assets			26,616,283				26,358,705				25,340,985				24,602,361				24,403,594				1	%			9	%
Allowance for loan losses			(202,618	)			(201,306	)			(200,654	)			(201,622	)			(208,884	)			1	%			(3	)%
Cash and due from banks			367,136				334,168				320,549				310,691				316,467				10	%			16	%
Fixed income receivables			41,688				83,019				75,255				73,029				74,495				(50	)%			(44	)%
Premises and equipment, net			289,202				282,849				278,042				275,206				275,764				2	%			5	%
Derivative assets			84,419				138,451				170,546				147,561				117,815				(39	)%			(28	)%
Other assets			1,609,996				1,640,781				1,624,979				1,621,322				1,639,443				(2	)%			(2	)%
Total assets		$	28,806,106			$	28,636,667			$	27,609,702			$	26,828,548			$	26,618,694				1	%			8	%
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Savings		$	9,473,424			$	9,202,101			$	8,507,474			$	7,865,977			$	7,898,580				3	%			20	%
Other interest-bearing deposits			5,889,098				5,706,246				5,450,401				5,431,736				5,281,059				3	%			12	%
Time deposits			1,405,242				1,341,052				1,266,765				1,300,709				1,286,320				5	%			9	%
Total interest-bearing deposits			16,767,764				16,249,399				15,224,640				14,598,422				14,465,959				3	%			16	%
Federal funds purchased			552,820				528,266				598,666				600,381				630,143				5	%			(12	)%
Securities sold under agreements to repurchase			419,131				378,837				387,486				490,449				445,964				11	%			(6	)%
Trading liabilities			642,456				745,011				752,270				828,629				758,739				(14	)%			(15	)%
Other short-term borrowings (c)			80,939				243,527				252,048				184,602				112,498				(67	)%			(28	)%
Term borrowings (d)			1,039,719				1,064,206				1,075,039				1,072,393				1,310,370				(2	)%			(21	)%
Total interest-bearing liabilities			19,502,829				19,209,246				18,290,149				17,774,876				17,723,673				2	%			10	%
Noninterest-bearing deposits			6,051,510				6,039,025				5,874,857				5,654,446				5,470,855				*				11	%
Fixed income payables			22,843				63,745				44,600				30,872				53,004				(64	)%			(57	)%
Derivative liabilities			84,928				123,460				146,063				129,260				122,378				(31	)%			(31	)%
Other liabilities			421,328				454,363				535,714				583,606				604,410				(7	)%			(30	)%
Total liabilities			26,083,438				25,889,839				24,891,383				24,173,060				23,974,320				1	%			9	%
Equity:
Common stock			146,098				145,902				145,362				145,226				147,287				*				(1	)%
Capital surplus			1,389,062				1,380,843				1,369,708				1,367,468				1,405,996				1	%			(1	)%
Undivided profits			1,044,388				1,015,742				967,872				924,822				889,209				3	%			17	%
Accumulated other comprehensive loss, net			(247,935	)			(186,714	)			(155,678	)			(173,083	)			(189,173	)			33	%			31	%
Preferred stock			95,624				95,624				95,624				95,624				95,624				*				*
Noncontrolling interest (e)			295,431				295,431				295,431				295,431				295,431				*				*
Total equity			2,722,668				2,746,828				2,718,319				2,655,488				2,644,374				(1	)%			3	%
Total liabilities and equity		$	28,806,106			$	28,636,667			$	27,609,702			$	26,828,548			$	26,618,694				1	%			8	%

Certain previously reported amounts have been reclassified to agree with current presentation.

NM - Not meaningful

* Amount is less than one percent.

(a)	Includes loans on nonaccrual status.
(b)	Includes excess balances held at Fed; 1Q17 increase largely driven by an inflow of customer deposits.
(c)	4Q16, 3Q16 and 2Q16 include higher FHLB borrowings as a result of increased loan demand.
(d)	In 2Q16 $250 million of FTBNA subordinated notes matured.
(e)	Consists of preferred stock of subsidiaries.

FHN CONSOLIDATED NET INTEREST INCOME (a)

Quarterly, Unaudited

 

																						1Q17 Changes vs.
(Thousands)		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Interest Income:
Loans, net of unearned income (b)		$	183,031			$	187,158			$	176,511			$	165,550			$	160,687				(2	)%			14	%
Loans held-for-sale			1,283				1,602				1,445				1,198				1,261				(20	)%			2	%
Investment securities:
U.S. government agencies			24,221				23,110				22,517				22,801				23,273				5	%			4	%
States and municipalities			101				102				102				106				97				(1	)%			4	%
Corporate bonds			131				131				131				132				131				*				*
Other			1,414				1,479				1,138				1,152				1,201				(4	)%			18	%
Total investment securities			25,867				24,822				23,888				24,191				24,702				4	%			5	%
Trading securities			6,602				8,616				7,110				8,374				8,185				(23	)%			(19	)%
Other earning assets:
Federal funds sold			54				52				70				57				80				4	%			(33	)%
Securities purchased under agreements to resell (c)			590				(186	)			169				322				226				NM				NM
Interest-bearing cash			4,235				1,027				604				574				1,252				NM				NM
Total other earning assets			4,879				893				843				953				1,558				NM				NM
Interest income		$	221,662			$	223,091			$	209,797			$	200,266			$	196,393				(1	)%			13	%
Interest Expense:
Interest-bearing deposits:
Savings		$	9,210			$	6,333			$	4,939			$	4,146			$	4,190				45	%			NM
Other interest-bearing deposits			4,143				2,935				2,592				2,526				2,304				41	%			80	%
Time deposits			2,833				2,728				2,496				2,474				2,323				4	%			22	%
Total interest-bearing deposits			16,186				11,996				10,027				9,146				8,817				35	%			84	%
Federal funds purchased			1,056				731				779				762				797				44	%			32	%
Securities sold under agreements to repurchase			89				47				90				138				59				89	%			51	%
Trading liabilities			3,781				3,848				3,331				3,782				4,039				(2	)%			(6	)%
Other short-term borrowings			247				373				385				303				272				(34	)%			(9	)%
Term borrowings			7,744				7,351				7,165				6,981				7,606				5	%			2	%
Interest expense			29,103				24,346				21,777				21,112				21,590				20	%			35	%
Net interest income - tax equivalent basis			192,559				198,745				188,020				179,154				174,803				(3	)%			10	%
Fully taxable equivalent adjustment			(2,851	)			(3,194	)			(2,825	)			(2,890	)			(2,729	)			11	%			(4	)%
Net interest income		$	189,708			$	195,551			$	185,195			$	176,264			$	172,074				(3	)%			10	%

Certain previously reported amounts have been reclassified to agree with current presentation.

* Amount is less than one percent.

NM - Not meaningful

(a)	Net interest income adjusted to a fully taxable equivalent (“FTE”) basis assuming a statutory federal income tax of 35 percent and, where applicable, state income taxes.
(b)	Includes interest on loans in nonaccrual status.
(c)	4Q16 driven by negative market rates on reverse repurchase agreements.

FHN CONSOLIDATED AVERAGE BALANCE SHEET: YIELDS AND RATES

Quarterly, Unaudited

 

 

			1Q17				4Q16				3Q16				2Q16				1Q16
Assets:
Earning assets (a):
Loans, net of unearned income (b):
Commercial loans			3.86	%			3.75	%			3.63	%			3.58	%			3.58	%
Consumer loans			4.13				4.06				4.08				4.08				4.07
Total loans, net of unearned income (c)			3.94				3.84				3.76				3.74				3.73
Loans held-for-sale			4.64				5.03				4.36				4.17				4.13
Investment securities:
U.S. government agencies			2.59				2.43				2.34				2.39				2.46
States and municipalities			9.33				9.39				9.01				7.27				6.70
Corporate bonds			5.25				5.25				5.25				5.25				5.25
Other			3.03				3.17				2.44				2.47				2.59
Total investment securities			2.63				2.48				2.36				2.41				2.48
Trading securities			2.84				2.69				2.46				2.64				2.87
Other earning assets:
Federal funds sold			1.28				1.07				0.99				1.11				1.26
Securities purchased under agreements to resell (d)			0.35				(0.09	)			0.08				0.15				0.11
Interest-bearing cash			0.81				0.57				0.49				0.48				0.50
Total other earning assets			0.70				0.23				0.25				0.28				0.34
Interest income/total earning assets			3.37	%			3.37	%			3.30	%			3.27	%			3.23	%
Liabilities:
Interest-bearing liabilities:
Interest-bearing deposits:
Savings			0.39	%			0.27	%			0.23	%			0.21	%			0.21	%
Other interest-bearing deposits			0.29				0.20				0.19				0.19				0.18
Time deposits			0.82				0.81				0.78				0.77				0.73
Total interest-bearing deposits			0.39				0.29				0.26				0.25				0.25
Federal funds purchased			0.77				0.55				0.52				0.51				0.51
Securities sold under agreements to repurchase			0.09				0.05				0.09				0.11				0.05
Trading liabilities			2.39				2.06				1.76				1.84				2.14
Other short-term borrowings (e)			1.24				0.61				0.61				0.66				0.97
Term borrowings (f)			2.98				2.76				2.67				2.60				2.32
Interest expense/total interest-bearing liabilities			0.60				0.51				0.47				0.48				0.49
Net interest spread			2.77	%			2.86	%			2.83	%			2.79	%			2.74	%
Effect of interest-free sources used to fund earning assets			0.15				0.14				0.13				0.13				0.14
Net interest margin			2.92	%			3.00	%			2.96	%			2.92	%			2.88	%

Certain previously reported amounts have been reclassified to agree with current presentation.

Yields are adjusted to a FTE basis assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

(a)	Earning assets yields are expressed net of unearned income.
(b)	Includes loan fees and cash basis interest income.
(c)	Includes loans on nonaccrual status.
(d)	4Q16 driven by negative market rates on reverse repurchase agreements.
(e)	4Q16, 3Q16 and 2Q16 rates driven by higher FHLB borrowings at a rate lower than other short-term borrowings.
(f)	Rates are expressed net of unamortized debenture cost for term borrowings.

FHN CAPITAL HIGHLIGHTS

Quarterly, Unaudited

 

																						1Q17 Changes vs.
(Dollars and shares in thousands)		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Common equity tier 1 capital (a) (b)		$	2,409,219			$	2,377,987			$	2,326,207			$	2,260,722			$	2,226,621				1	%			8	%
Tier 1 capital (a) (b)			2,681,438				2,671,871				2,615,449				2,538,876				2,493,080				*				8	%
Total capital (a)			2,926,985				2,926,010				2,868,437				2,788,558				2,744,189				*				7	%
Risk-weighted assets (“RWA”) (a) (b)			23,735,500				23,914,158				23,716,102				22,503,305				21,559,035				(1	)%			10	%
Average assets for leverage (a) (b)			28,805,448				28,581,251				27,481,309				26,715,209				26,519,986				1	%			9	%
Common equity tier 1 ratio (a) (b)			10.15	%			9.94	%			9.81	%			10.05	%			10.33	%
Tier 1 ratio (a) (b)			11.30				11.17				11.03				11.28				11.56
Total capital ratio (a)			12.33				12.24				12.09				12.39				12.73
Leverage ratio (a) (b)			9.31				9.35				9.52				9.50				9.40
Total equity to total assets			9.25	%			9.47	%			9.65	%			9.77	%			9.80	%
Tangible common equity/tangible assets (“TCE/TA”) (c)			7.27	%			7.42	%			7.58	%			7.63	%			7.61	%
Period-end shares outstanding			233,883				233,624				233,235				232,019				232,547				*				1	%
Cash dividends declared per common share		$	0.09			$	0.07			$	0.07			$	0.07			$	0.07				29	%			29	%
Book value per common share		$	10.05			$	9.90			$	10.09			$	9.92			$	9.68
Tangible book value per common share (c)		$	9.14			$	9.00			$	9.17			$	8.99			$	8.75
Market capitalization (millions)		$	4,326.8			$	4,674.8			$	3,552.2			$	3,197.2			$	3,046.4

Certain previously reported amounts have been reclassified to agree with current presentation.

* Amount is less than one percent.

(a)	Current quarter is an estimate.
(b)	See Glossary of Terms for definition.
(c)	TCE/TA and Tangible book value per common share are non-GAAP measures and are reconciled to Total equity to total assets (GAAP) and to Book value per common share (GAAP), respectively, in the Non-GAAP to GAAP reconciliation on page 22 of this financial supplement.

FHN BUSINESS SEGMENT HIGHLIGHTS

Quarterly, Unaudited

 

																						1Q17 Changes vs.
(Thousands)		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Regional Banking
Net interest income		$	193,389			$	200,716			$	190,508			$	178,318			$	172,312				(4	)%			12	%
Noninterest income			58,976				63,324				65,128				61,275				59,276				(7	)%			(1	)%
Total revenues			252,365				264,040				255,636				239,593				231,588				(4	)%			9	%
Provision for loan losses			3,098				4,692				8,544				10,883				14,767				(34	)%			(79	)%
Noninterest expense (a)			148,065				160,851				145,050				164,524				145,399				(8	)%			2	%
Income before income taxes			101,202				98,497				102,042				64,186				71,422				3	%			42	%
Provision for income taxes			36,623				35,400				37,063				22,372				25,407				3	%			44	%
Net income		$	64,579			$	63,097			$	64,979			$	41,814			$	46,015				2	%			40	%
Fixed Income
Net interest income		$	1,151			$	2,541			$	2,411			$	3,146			$	2,667				(55	)%			(57	)%
Noninterest income			50,822				52,061				72,073				78,083				67,122				(2	)%			(24	)%
Total revenues			51,973				54,602				74,484				81,229				69,789				(5	)%			(26	)%
Noninterest expense			48,685				48,726				59,423				62,802				58,623				*				(17	)%
Income before income taxes			3,288				5,876				15,061				18,427				11,166				(44	)%			(71	)%
Provision for income taxes			1,024				1,875				5,518				6,786				3,892				(45	)%			(74	)%
Net income		$	2,264			$	4,001			$	9,543			$	11,641			$	7,274				(43	)%			(69	)%
Corporate
Net interest income/(expense)		$	(14,100	)		$	(17,500	)		$	(18,193	)		$	(15,847	)		$	(14,363	)			19	%			2	%
Noninterest income			5,476				4,670				5,134				4,909				5,723				17	%			(4	)%
Total revenues			(8,624	)			(12,830	)			(13,059	)			(10,938	)			(8,640	)			33	%			*
Noninterest expense			16,880				14,593				14,929				15,930				13,461				16	%			25	%
Loss before income taxes			(25,504	)			(27,423	)			(27,988	)			(26,868	)			(22,101	)			7	%			(15	)%
Benefit for income taxes			(13,093	)			(15,118	)			(16,772	)			(12,784	)			(11,246	)			13	%			(16	)%
Net income/(loss)		$	(12,411	)		$	(12,305	)		$	(11,216	)		$	(14,084	)		$	(10,855	)			(1	)%			(14	)%
Non-Strategic
Net interest income		$	9,268			$	9,794			$	10,469			$	10,647			$	11,458				(5	)%			(19	)%
Noninterest income (b)			1,665				4,022				6,210				1,247				2,184				(59	)%			(24	)%
Total revenues			10,933				13,816				16,679				11,894				13,642				(21	)%			(20	)%
Provision/(provision credit) for loan losses			(4,098	)			(4,692	)			(4,544	)			(6,883	)			(11,767	)			13	%			65	%
Noninterest expense (c)			8,575				13,727				14,156				(16,434	)			9,444				(38	)%			(9	)%
Income/(loss) before income taxes			6,456				4,781				7,067				35,211				15,965				35	%			(60	)%
Provision/(benefit) for income taxes			2,500				1,851				2,738				13,642				6,186				35	%			(60	)%
Net income/(loss)		$	3,956			$	2,930			$	4,329			$	21,569			$	9,779				35	%			(60	)%
Total Consolidated
Net interest income		$	189,708			$	195,551			$	185,195			$	176,264			$	172,074				(3	)%			10	%
Noninterest income			116,939				124,077				148,545				145,514				134,305				(6	)%			(13	)%
Total revenues			306,647				319,628				333,740				321,778				306,379				(4	)%			*
Provision/(provision credit) for loan losses			(1,000	)			—				4,000				4,000				3,000				NM				NM
Noninterest expense			222,205				237,897				233,558				226,822				226,927				(7	)%			(2	)%
Income before income taxes			85,442				81,731				96,182				90,956				76,452				5	%			12	%
Provision for income taxes			27,054				24,008				28,547				30,016				24,239				13	%			12	%
Net income		$	58,388			$	57,723			$	67,635			$	60,940			$	52,213				1	%			12	%

Certain previously reported amounts have been reclassified to agree with current presentation.

NM - Not meaningful

* Amount is less than one percent.

(a)	4Q16 includes $2.7 million of loss accruals related to legal matters; 3Q16 includes a $4.3 million reversal of loss accruals related to legal matters; 2Q16 includes $22.0 million of loss accruals related to legal matters.
(b)	4Q16 includes a $1.5 million gain related to the reversal of a contingency accrual associated with prior sales of MSR; 3Q16 includes $4.4 million of gains primarily related to recoveries associated with prior legacy mortgage servicing sales.
(c)	4Q16 includes $2.0 million of loss accruals related to legal matters; 3Q16 includes $4.5 million of loss accruals related to legal matters; 2Q16 includes a $31.4 million reversal of repurchase and foreclosure provision as a result of the settlements/recoveries of certain repurchase claims, somewhat offset by $4.0 million of loss accruals related to legal matters.

FHN REGIONAL BANKING

Quarterly, Unaudited

 

																						1Q17 Changes vs.
		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Income Statement (thousands)
Net interest income		$	193,389			$	200,716			$	190,508			$	178,318			$	172,312				(4	)%			12	%
Provision for loan losses			3,098				4,692				8,544				10,883				14,767				(34	)%			(79	)%
Noninterest income:
NSF / Overdraft fees (a)			6,316				9,707				10,076				8,905				9,576				(35	)%			(34	)%
Cash management fees			9,196				8,659				7,947				8,612				8,760				6	%			5	%
Debit card income			3,407				3,516				3,496				3,464				3,221				(3	)%			6	%
Other			4,327				4,291				4,215				4,466				4,288				1	%			1	%
Total deposit transactions and cash management			23,246				26,173				25,734				25,447				25,845				(11	)%			(10	)%
Brokerage, management fees and commissions			11,906				11,003				10,828				10,665				10,415				8	%			14	%
Trust services and investment management			6,680				7,056				6,900				7,239				6,569				(5	)%			2	%
Bankcard income (b)			5,342				6,230				6,151				6,432				5,132				(14	)%			4	%
Other service charges			2,618				2,596				2,591				2,579				2,318				1	%			13	%
Miscellaneous revenue (c)			9,184				10,266				12,924				8,913				8,997				(11	)%			2	%
Total noninterest income			58,976				63,324				65,128				61,275				59,276				(7	)%			(1	)%
Noninterest expense:
Employee compensation, incentives, and benefits			57,990				58,627				56,440				53,413				52,173				(1	)%			11	%
Other (d)			90,075				102,224				88,610				111,111				93,226				(12	)%			(3	)%
Total noninterest expense			148,065				160,851				145,050				164,524				145,399				(8	)%			2	%
Income before income taxes		$	101,202			$	98,497			$	102,042			$	64,186			$	71,422				3	%			42	%
PPNR (e)			104,300				103,189				110,586				75,069				86,189				1	%			21	%
Efficiency ratio (f)			58.67	%			60.92	%			56.74	%			68.67	%			62.78	%
Balance Sheet (millions)
Average loans		$	17,199			$	17,692			$	16,844			$	15,859			$	15,224				(3	)%			13	%
Average other earning assets			34				37				46				42				47				(8	)%			(28	)%
Total average earning assets			17,233				17,729				16,890				15,901				15,271				(3	)%			13	%
Total average deposits			19,660				19,022				18,604				18,367				18,053				3	%			9	%
Total period-end deposits			20,541				19,348				18,742				18,674				18,534				6	%			11	%
Total period-end assets			18,329				18,771				18,562				17,434				16,280				(2	)%			13	%
Net interest margin (g)			4.61	%			4.57	%			4.55	%			4.57	%			4.60	%
Net interest spread			3.57				3.52				3.46				3.44				3.42
Loan yield			3.78				3.68				3.61				3.59				3.57
Deposit average rate			0.21				0.16				0.15				0.15				0.15
Key Statistics
Financial center locations			162				162				162				162				174				*				(7	)%

Certain previously reported amounts have been reclassified to agree with current presentation.

* Amount is less than one percent.

(a)	Variability is driven by changes in consumer behavior and seasonality; 1Q17 decrease driven by seasonality and a modification of billing practices.
(b)	2Q16 increase driven by a significant new relationship.
(c)	3Q16 includes a $1.8 million gain on the sales of properties.
(d)	4Q16 includes $2.7 million of loss accruals related to legal matters; 3Q16 includes a reversal of loss accruals related to legal matters of $4.3 million; 2Q16 includes $22.0 million of loss accruals related to legal matters; 1Q16 includes $3.7 million of impairment related to branch closures.
(e)	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.
(f)	Noninterest expense divided by total revenue.
(g)	Net interest margin is computed using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

FHN FIXED INCOME

Quarterly, Unaudited

 

																						1Q17 Changes vs.
		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Income Statement (thousands)
Net interest income		$	1,151			$	2,541			$	2,411			$	3,146			$	2,667				(55	)%			(57	)%
Noninterest income:
Fixed income product revenue			42,727				43,794				59,003				69,279				57,583				(2	)%			(26	)%
Other (a)			8,095				8,267				13,070				8,804				9,539				(2	)%			(15	)%
Total noninterest income			50,822				52,061				72,073				78,083				67,122				(2	)%			(24	)%
Noninterest expense			48,685				48,726				59,423				62,802				58,623				*				(17	)%
Income before income taxes		$	3,288			$	5,876			$	15,061			$	18,427			$	11,166				(44	)%			(71	)%
Efficiency ratio (b)			93.67	%			89.24	%			79.78	%			77.31	%			84.00	%
Fixed income product average daily revenue		$	689			$	718			$	922			$	1,082			$	944				(4	)%			(27	)%
Balance Sheet (millions)
Average trading inventory		$	927			$	1,281			$	1,153			$	1,267			$	1,138				(28	)%			(19	)%
Average other earning assets			703				818				831				893				822				(14	)%			(14	)%
Total average earning assets			1,630				2,099				1,984				2,160				1,960				(22	)%			(17	)%
Total period-end assets			2,395				1,817				2,516				2,540				2,361				32	%			1	%
Net interest margin (c)			0.33	%			0.57	%			0.55	%			0.64	%			0.63	%

Certain previously reported amounts have been reclassified to agree with current presentation.

*	Amount is less than one percent.
(a)	3Q16 increase driven by higher fees from loan and derivative sales.
(b)	Noninterest expense divided by total revenue.
(c)	Net interest margin is computed using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

 

FHN CORPORATE

Quarterly, Unaudited

 

																						1Q17 Changes vs.
		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Income Statement (thousands)
Net interest income/(expense)		$	(14,100	)		$	(17,500	)		$	(18,193	)		$	(15,847	)		$	(14,363	)			19	%			2	%
Noninterest income excluding securities gains/(losses)			5,432				4,802				5,335				4,810				4,149				13	%			31	%
Securities gains/(losses), net			44				(132	)			(201	)			99				1,574				NM				(97	)%
Noninterest expense (a)			16,880				14,593				14,929				15,930				13,461				16	%			25	%
Loss before income taxes		$	(25,504	)		$	(27,423	)		$	(27,988	)		$	(26,868	)		$	(22,101	)			7	%			(15	)%
Average Balance Sheet (millions)
Average loans		$	80			$	86			$	91			$	96			$	103				(7	)%			(22	)%
Total earning assets		$	6,122			$	4,795			$	4,617			$	4,576			$	5,093				28	%			20	%
Net interest margin (b)			(0.96	)%			(1.44	)%			(1.55	)%			(1.40	)%			(1.14	)%

Certain previously reported amounts have been reclassified to agree with current presentation.

NM - Not meaningful

(a)	2Q16 includes $2.5 million of negative valuation adjustments associated with derivatives related to prior sales of Visa Class B shares.
(b)	Net interest margin is computed using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

FHN NON-STRATEGIC

Quarterly, Unaudited

 

																						1Q17 Changes vs.
		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Income Statement (thousands)
Net interest income		$	9,268			$	9,794			$	10,469			$	10,647			$	11,458				(5	)%			(19	)%
Provision/(provision credit) for loan losses			(4,098	)			(4,692	)			(4,544	)			(6,883	)			(11,767	)			13	%			65	%
Noninterest income (a)			1,665				4,022				6,210				1,247				2,184				(59	)%			(24	)%
Noninterest expense (b)			8,575				13,727				14,156				(16,434	)			9,444				(38	)%			(9	)%
Income/(loss) before income taxes		$	6,456			$	4,781			$	7,067			$	35,211			$	15,965				35	%			(60	)%
Average Balance Sheet (millions)
Loans		$	1,535			$	1,636			$	1,744			$	1,856			$	1,967				(6	)%			(22	)%
Loans held-for-sale			93				96				100				103				106				(3	)%			(12	)%
Trading securities			2				3				3				3				4				(33	)%			(50	)%
Allowance for loan losses			(48	)			(50	)			(53	)			(59	)			(69	)			(4	)%			(30	)%
Other assets			34				37				47				46				34				(8	)%			*
Total assets			1,616				1,722				1,841				1,949				2,042				(6	)%			(21	)%
Net interest margin (c)			2.29	%			2.25	%			2.26	%			2.17	%			2.21	%
Efficiency ratio (d)			78.43	%			99.36	%			84.87	%			NM				69.23	%

Certain previously reported amounts have been reclassified to agree with current presentation.
NM - Not meaningful
* Amount is less than one percent.
(a)	4Q16 includes a $1.5 million gain related to the reversal of a contingency accrual associated with prior sales of MSR; 3Q16 includes $4.4 million of gains primarily related to recoveries associated with prior legacy mortgage servicing sales.
(b)	4Q16 includes $2.0 million of loss accruals related to legal matters; 3Q16 includes $4.5 million of loss accruals related to legal matters; 2Q16 includes a $31.4 million reversal of repurchase and foreclosure provision as a result of the settlements/recoveries of certain repurchase claims, somewhat offset by $4.0 million of loss accruals related to legal matters.
(c)	Net interest margin is computed using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.
(d)	Noninterest expense divided by total revenue excluding securities gains/(losses).

FHN ASSET QUALITY: CONSOLIDATED

Quarterly, Unaudited

 

																						1Q17 Changes vs.
(Dollars in thousands)		1Q17				4Q16				3Q16				2Q16				1Q16				4Q16				1Q16
Allowance for Loan Losses Walk-Forward
Beginning reserve		$	202,068			$	201,557			$	199,807			$	204,034			$	210,242				*				(4	)%
Provision/(provision credit) for loan losses			(1,000	)			—				4,000				4,000				3,000				NM				NM
Charge-offs			(8,413	)			(11,369	)			(10,362	)			(18,296	)			(17,612	)			(26	)%			(52	)%
Recoveries			9,313				11,880				8,112				10,069				8,404				(22	)%			11	%
Ending balance		$	201,968			$	202,068			$	201,557			$	199,807			$	204,034				*				(1	)%
Reserve for unfunded commitments			5,284				5,312				4,802				5,351				5,495				(1	)%			(4	)%
Total allowance for loan losses plus reserve for unfunded commitments		$	207,252			$	207,380			$	206,359			$	205,158			$	209,529				*				(1	)%
Allowance for Loan Losses
Regional Banking		$	155,968			$	154,082			$	151,397			$	146,351			$	143,088				1	%			9	%
Non-Strategic			46,000				47,986				50,160				53,456				60,946				(4	)%			(25	)%
Total allowance for loan losses		$	201,968			$	202,068			$	201,557			$	199,807			$	204,034				*				(1	)%
Nonperforming Assets
Regional Banking
Nonperforming loans		$	49,462			$	50,653			$	50,267			$	60,754			$	72,323				(2	)%			(32	)%
Foreclosed real estate (a)			4,422				5,081				5,811				7,031				11,045				(13	)%			(60	)%
Total Regional Banking		$	53,884			$	55,734			$	56,078			$	67,785			$	83,368				(3	)%			(35	)%
Non-Strategic
Nonperforming loans		$	92,409			$	93,808			$	100,572			$	114,947			$	120,335				(1	)%			(23	)%
Nonperforming loans held-for-sale after fair value adjustments			7,633				7,741				7,791				8,195				8,568				(1	)%			(11	)%
Foreclosed real estate (a)			5,837				6,154				7,867				7,119				6,415				(5	)%			(9	)%
Total Non-Strategic		$	105,879			$	107,703			$	116,230			$	130,261			$	135,318				(2	)%			(22	)%
Corporate
Nonperforming loans		$	1,521			$	1,186			$	1,211			$	896			$	927				28	%			64