First Horizon Reports Second Quarter Results and Highlights
MEMPHIS, Tenn., July 16, 2019 (GLOBE NEWSWIRE) -- First Horizon National Corp. (NYSE: FHN) today announced its second quarter 2019 financial results. Reported earnings per share (EPS) were $0.35, up from $0.31 in first quarter 2019; on an adjusted basis1, earnings per share were $0.42, up from $0.35 in first quarter 2019.
“Our results demonstrated our commitment to achieve our Capital Bank merger objectives and the strategic priorities we laid out during our Investor Day to transform First Horizon,” said Bryan Jordan, First Horizon’s chairman and CEO. “In the second quarter, we gained loan and deposit growth momentum within our key markets and specialty areas, exercised good expense discipline while reinvesting in the company, and continued to strengthen our balance sheet. As we head into the second half of the year, we remain optimistic about our bankers’ ability to continue to deliver on our plan.”
Last month, First Horizon announced that it would bring together its family of companies under a unified set of brand names and a new logo. The unification of First Horizon’s banking, wealth management and fixed income businesses under a common First Horizon brand represents an important step in the company’s transformation.
Highlights for the second quarter include:
- Strong loan and deposit growth in Regional Banking
- Net interest margin (NIM) of 3.34% in 2Q19 compared to 3.31% in 1Q19
- Fixed Income average daily revenue up 19% from 1Q19
- Stable asset quality overall, with net charge off ratio (net charge offs/average loans) unchanged from 1Q19 at .07%
- Dividend payout of 41% in 2Q19
Second Quarter 2019 Financial Highlights
| Diluted EPS/Adjusted EPS1$0.35/ $0.42 | ROA/Adjusted ROA11.11% / 1.32% | ROCE /Adjusted ROCE19.79% / 11.78% | ROTCE1/Adjusted ROTCE115.12% / 18.19% |
1These are non-GAAP numbers that are reconciled to reported GAAP numbers in the FHN Non-GAAP to GAAP Reconciliation table.
Consolidated HighlightsQuarterly, Unaudited
| 2Q19 Changes vs. | ||||||||||||||||||
| (Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
| Consolidated | ||||||||||||||||||
| Income Statement | ||||||||||||||||||
| Net interest income | $ | 303,610 | $ | 294,508 | $ | 310,932 | 3 | % | (2 | ) | % | |||||||
| Noninterest income | 157,993 | 141,045 | 127,525 | 12 | % | 24 | % | |||||||||||
| Total revenues | 461,603 | 435,553 | 438,457 | 6 | % | 5 | % | |||||||||||
| Provision /(Provision Credit) for loan losses | 13,000 | 9,000 | — | 44 | % | NM | ||||||||||||
| Noninterest expense | 300,394 | 296,090 | 332,768 | 1 | % | (10 | ) | % | ||||||||||
| Income before income taxes | 148,209 | 130,463 | 105,689 | 14 | % | 40 | % | |||||||||||
| Provision for income taxes | 34,467 | 27,058 | 19,697 | 27 | % | 75 | % | |||||||||||
| Net income | 113,742 | 103,405 | 85,992 | 10 | % | 32 | % | |||||||||||
| Net income attributable to noncontrolling interest | 2,852 | 2,820 | 2,852 | 1 | % | * | ||||||||||||
| Preferred stock dividends | 1,550 | 1,550 | 1,550 | * | * | |||||||||||||
| Net income available to common shareholders | $ | 109,340 | $ | 99,035 | $ | 81,590 | 10 | % | 34 | % | ||||||||
| NIM | 3.34 | % | 3.31 | % | 3.53 | % | 1 | % | (5 | ) | % | |||||||
| Diluted Shares | 315,786 | 319,581 | 328,426 | (1 | ) | % | (4 | ) | % | |||||||||
| Balance Sheet | ||||||||||||||||||
| Average Loans | $ | 28,672,161 | $ | 27,313,300 | $ | 27,298,787 | 5 | % | 5 | % | ||||||||
| Average Deposits | 31,963,544 | 32,497,478 | 30,691,672 | (2 | ) | % | 4 | % | ||||||||||
| Average Assets | 41,243,007 | 40,883,192 | 40,173,712 | 1 | % | 3 | % | |||||||||||
| Average Common Equity | 4,478,106 | 4,418,180 | 4,161,491 | 1 | % | 8 | % | |||||||||||
| NM - Not meaningful | ||||||||||||||||||
| * Amount is less than one percent. | ||||||||||||||||||
Consolidated Highlights include:
- Total revenue up 6% with increases in fee income and net interest income (NII)
- Increase in fee income largely due to higher fixed income revenue
- NII up from higher commercial loan balances and loan accretion, somewhat offset by the negative impact of a decline in London Inter-bank Offered Rate (LIBOR)
- Efficiency ratio of 65.08%, compared to 67.99% in 1Q19; adjusted efficiency ratio1 of 59.00%, compared to 63.90% in 1Q19
- Net interest margin (NIM) of 3.34% in 2Q19 compared to 3.31% in 1Q19; increase primarily due to lower interest bearing cash, higher loan accretion, and a favorable shift in deposit mix, somewhat offset by a decline in LIBOR
- Average loan growth of 5%
1These are non-GAAP numbers that are reconciled to reported GAAP numbers in the FHN Non-GAAP to GAAP Reconciliation table.
Regional Banking HighlightsQuarterly, Unaudited
| 2Q19 Changes vs. | ||||||||||||||||||
| (Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
| Regional Banking | ||||||||||||||||||
| Net interest income | $ | 297,328 | $ | 285,913 | $ | 305,935 | 4 | % | (3 | ) | % | |||||||
| Noninterest income | 81,475 | 73,030 | 80,767 | 12 | % | 1 | % | |||||||||||
| Total revenues | 378,803 | 358,943 | 386,702 | 6 | % | (2 | ) | % | ||||||||||
| Provision for loan losses | 17,775 | 13,443 | 4,613 | 32 | % | NM | ||||||||||||
| Noninterest expense | 193,268 | 199,468 | 210,038 | (3 | ) | % | (8 | ) | % | |||||||||
| Income before income taxes | $ | 167,760 | $ | 146,032 | $ | 172,051 | 15 | % | (2 | ) | % | |||||||
| Balance Sheet | ||||||||||||||||||
| Average Loans | $ | 27,532,566 | $ | 26,107,250 | $ | 25,814,450 | 5 | % | 7 | % | ||||||||
| Average Deposits | 29,953,710 | 29,590,235 | 27,411,039 | 1 | % | 9 | % | |||||||||||
| NM - Not meaningful | ||||||||||||||||||
Regional Banking highlights include:
- Strong loan and deposit growth
- Loan growth due to increases in C&I and specialty areas
- Customer deposit growth from ongoing focus on new-to-bank households
- Net interest income (NII) up from an increase in commercial loans, higher accretion, and more days in 2Q19
- Fee income up 12% with solid growth in nearly all products and services
- Expenses down 3% driven by continued strategic focus on expense optimization
Fixed Income Highlights Quarterly, Unaudited
| 2Q19 Changes vs. | ||||||||||||||||||
| (Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
| Fixed Income | ||||||||||||||||||
| Net interest income | $ | 6,171 | $ | 7,331 | $ | 9,200 | (16 | ) | % | (33 | ) | % | ||||||
| Noninterest income | 65,622 | 53,807 | 38,363 | 22 | % | 71 | % | |||||||||||
| Total revenues | 71,793 | 61,138 | 47,563 | 17 | % | 51 | % | |||||||||||
| Noninterest expense | 55,770 | 50,774 | 46,933 | 10 | % | 19 | % | |||||||||||
| Income before income taxes | $ | 16,023 | $ | 10,364 | $ | 630 | 55 | % | NM | |||||||||
| NM - Not meaningful | ||||||||||||||||||
Fixed Income Highlights include:
- Decline in interest rates and rate outlook favorably impacted 2Q19 activity
- 2Q19 average daily revenue (ADR) of $866,000, compared to ADR of $729,000 in 1Q19, up 19% with growth across multiple trading desks from 1Q19
- Pre-tax income up from higher ADR, an increase in other product revenue, somewhat offset by higher variable compensation
Capital and Liquidity HighlightsQuarterly, Unaudited
| 2Q19 Changes vs. | ||||||||||||||||||
| (Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
| Capital and Liquidity Highlights | ||||||||||||||||||
| Common dividends declared | $ | 43.7 | $ | 44.3 | $ | 38.9 | (1 | ) | % | 12 | % | |||||||
| Preferred dividends declared | 1.6 | 1.6 | 1.6 | * | * | |||||||||||||
| Share repurchases | 50.2 | 51.5 | — | (3 | ) | % | NM | |||||||||||
| Capital Ratios (a) | ||||||||||||||||||
| Common Equity Tier 1 | 9.25 | % | 9.62 | % | 8.98 | % | ||||||||||||
| Tier 1 | 10.24 | % | 10.65 | % | 9.98 | % | ||||||||||||
| Total Capital | 11.34 | % | 11.78 | % | 11.25 | % | ||||||||||||
| Leverage | 9.05 | % | 9.02 | % | 8.56 | % | ||||||||||||
| (a) Regulatory capital ratios calculated under the Basel III risk-based capital rules as phased-in; current quarter is an estimate. | ||||||||||||||||||
| NM - Not meaningful | ||||||||||||||||||
| * Amount is less than one percent. | ||||||||||||||||||
Capital and Liquidity Highlights include:
- Declared quarterly dividend of $.14 in 2Q19; dividend payout of 41%
- Repurchased 3.5 million shares (weighted average price - $14.30) in 2Q19 compared to 3.5 million shares (weighted average price - $14.85) in 1Q19
- Deployed capital effectively through dividends, share buybacks and loan growth
Asset Quality HighlightsQuarterly, Unaudited
| 2Q19 Changes vs. | ||||||||||||||||||
| (Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
| Asset Quality Highlights | ||||||||||||||||||
| Allowance for loan losses | $ | 192,749 | $ | 184,911 | $ | 185,462 | 4 | % | 4 | % | ||||||||
| Allowance / loans % | 0.65 | % | 0.66 | % | 0.67 | % | ||||||||||||
| Net Charge-offs | $ | 5,162 | $ | 4,513 | $ | 1,732 | 14 | % | NM | |||||||||
| Net charge-offs % | 0.07 | % | 0.07 | % | 0.03 | % | ||||||||||||
| Nonperforming Loans (a) | $ | 204,586 | $ | 181,624 | $ | 124,792 | 13 | % | 64 | % | ||||||||
| NPL % | 0.69 | % | 0.65 | % | 0.45 | % | ||||||||||||
| 30+ delinquencies | 58,861 | 63,693 | 85,139 | (8 | ) | % | (31 | ) | % | |||||||||
| 30+ delinquencies % | 0.20 | % | 0.23 | % | 0.31 | % | ||||||||||||
| (a) Excludes loans held-for-sale. | ||||||||||||||||||
| NM - Not meaningful | ||||||||||||||||||
Asset Quality Highlights include:
- Stable asset quality overall, with net charge off ratio unchanged from 1Q19 at .07%. Net charge-offs were $5.2 million in 2Q19 compared to $4.5 million in 1Q19; increase driven by one mortgage warehouse lending relationship
- Increase in reserves primarily driven by loan growth within the commercial portfolio partially offset by declining balances in the non-strategic portfolio
- Nonperforming loans increased $29 million, primarily driven by one mortgage warehouse lending relationship
- 30+ delinquencies improved
Use of Non-GAAP MeasuresSeveral financial measures in this release are non-GAAP, meaning they are not presented in accordance with generally accepted accounting principles (GAAP) in the U.S. The non-GAAP items presented in this release are adjusted earnings per share ("EPS"), adjusted return on average assets ("ROA"), adjusted return on average common equity (“ROCE”), return on average tangible common equity ("ROTCE"), adjusted ROTCE, and adjusted efficiency ratio. These profitability measures are reported to First Horizon’s management and directors through various internal reports. First Horizon’s management believes these measures are relevant to understanding the financial results of First Horizon and its business segments. Non-GAAP measures are not formally defined by GAAP or codified in the federal banking regulations, and other entities may use calculation methods that differ from those used by First Horizon. First Horizon has reconciled each of these measures to a comparable GAAP measure below:
| FHN NON-GAAP TO GAAP RECONCILIATION | |||||||||
| Quarterly, Unaudited | |||||||||
| (Dollars and shares in thousands, except per share data) | |||||||||
| Adjusted Diluted EPS | 2Q19 | 1Q19 | |||||||
| Net income available to common ("NIAC") (GAAP) | a | $ | 109,340 | $ | 99,035 | ||||
| Plus Tax effected notable items (Non-GAAP) (a) | $ | 22,184 | $ | 13,660 | |||||
| Adjusted NIAC (Non-GAAP) | b | $ | 131,524 | $ | 112,695 | ||||
| Diluted Shares (GAAP) | c | 315,786 | 319,581 | ||||||
| Diluted EPS (GAAP) | a/c | $ | 0.35 | $ | 0.31 | ||||
| Adjusted diluted EPS (Non-GAAP) | b/c | $ | 0.42 | $ | 0.35 | ||||
| Adjusted Return on Assets ("ROA") | 2Q19 | 1Q19 | |||||||
| Net Income ("NI") (GAAP) | $ | 113,742 | $ | 103,405 | |||||
| Plus Tax effected notable items (Non-GAAP) (a) | $ | 22,184 | $ | 13,660 | |||||
| Adjusted NI (Non-GAAP) | $ | 135,926 | $ | 117,065 | |||||
| NI (annualized) (GAAP) | d | $ | 456,218 | $ | 419,365 | ||||
| Adjusted NI (annualized) (Non-GAAP) | e | $ | 545,198 | $ | 474,764 | ||||
| Average assets (GAAP) | f | $ | 41,243,007 | $ | 40,883,192 | ||||
| ROA (GAAP) | d/f | 1.11 | % | 1.03 | % | ||||
| Adjusted ROA (Non-GAAP) | e/f | 1.32 | % | 1.16 | % | ||||
| Adjusted Return on Average Common Equity ("ROCE")/ Return on Average Tangible Common Equity ("ROTCE") | 2Q19 | 1Q19 | |||||||
| NIAC (GAAP) | $ | 109,340 | $ | 99,035 | |||||
| Plus Tax effected notable items (Non-GAAP) (a) | $ | 22,184 | $ | 13,660 | |||||
| Adjusted NIAC (Non-GAAP) | $ | 131,524 | $ | 112,695 | |||||
| NIAC (annualized) (GAAP) | g | $ | 438,562 | $ | 401,642 | ||||
| Adjusted NIAC (annualized) (Non-GAAP) | h | $ | 527,541 | $ | 457,041 | ||||
| Average Common Equity (GAAP) | i | $ | 4,478,106 | $ | 4,418,180 | ||||
| Intangible Assets (GAAP) (b) | $ | 1,578,505 | $ | 1,584,694 | |||||
| Average Tangible Common Equity (Non-GAAP) | j | $ | 2,899,601 | $ | 2,833,486 | ||||
| ROCE (GAAP) | g/i | 9.79 | % | 9.09 | % | ||||
| Adjusted ROCE (Non-GAAP) | h/i | 11.78 | % | 10.34 | % | ||||
| ROTCE (Non-GAAP) | g/j | 15.12 | % | 14.17 | % | ||||
| Adjusted ROTCE (Non-GAAP) | h/j | 18.19 | % | 16.13 | % | ||||
| Adjusted Efficiency Ratio | 2Q19 | 1Q19 | |||||||
| Noninterest expense (GAAP) | k | $ | 300,394 | $ | 296,090 | ||||
| Plus notable items (GAAP) | $ | (28,059 | ) | $ | (17,812 | ) | |||
| Adjusted noninterest expense (Non-GAAP) | l | $ | 272,335 | $ | 278,278 | ||||
| Revenue excluding securities gains/losses (GAAP) | m | $ | 461,554 | $ | 435,522 | ||||
| Plus notable items (GAAP) | $ | — | $ | — | |||||
| Adjusted revenue excluding securities gains/losses (Non-GAAP) | n | $ | 461,554 | $ | 435,522 | ||||
| Efficiency ratio (GAAP) | k/m | 65.08 | % | 67.99 | % | ||||
| Adjusted efficiency ratio (Non-GAAP) | l/n | 59.00 | % | 63.90 | % | ||||
(a) 2Q19 includes $18.7 million of pre-tax restructuring-related expenses associated with efficiency initiatives, $9.1 million of pre-tax rebranding expenses, $8.6 million of pre-tax acquisition-related expenses primarily associated with the Capital Bank Financial Corp. (“CBF”) acquisition, and an $8.3 million pre-tax expense reversal related to the settlement of litigation matters; 1Q19 includes $12.2 million of pre-tax restructuring-related expenses and $5.7 million of pre-tax acquisition-related expenses, all of which impact certain performance measures, and have been adjusted using an incremental tax rate of approximately 21 percent in 2Q19 and 23 percent in 1Q19.
(b) Includes goodwill and other intangible assets, net of amortization.
Conference callManagement will hold a conference call at 8:30 a.m. Central Time today to review earnings and performance trends. There will also be a live webcast accompanied by the slide presentation available in the investor relations section of www.FirstHorizon.com. The call and slide presentation may involve forward-looking information, including guidance.
Analysts, investors and interested parties may call toll-free starting at 8:15 a.m. Central Time today by dialing 888-317-6003 (if calling from the U.S.) or 412-317-6061 (if calling from outside the U.S) and entering access code 8792639.
A replay of the call will be available beginning at noon Central Time today until midnight Central Time on July 30. To listen to the replay, dial 877-344-7529 (U.S. callers) or 412-317-0088 (international callers); the access code is 10132995. A replay of the webcast will also be available at http://ir.fhnc.com/Event by midnight Central Time on July 16 and will be archived on the site for one year.
Disclaimers and Other InformationThis communication contains forward-looking statements involving significant risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking information. Those factors include general economic and financial market conditions, including expectations of and actual timing and amount of interest rate movements including the slope of the yield curve, competition, ability to execute business plans, geopolitical developments, recent and future legislative and regulatory developments, inflation or deflation, market (particularly real estate market) and monetary fluctuations, natural disasters, customer, investor and regulatory responses to these conditions and items already mentioned in this press release, as well as critical accounting estimates and other factors described in First Horizon's annual report on Form 10-K and other recent filings with the SEC. First Horizon disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements included herein or therein to reflect future events or developments or changes in expectations.
About First HorizonFirst Horizon National Corp. (NYSE: FHN) provides financial services through its Capital Bank, First Tennessee Bank, FTB Advisors, and FTN Financial businesses. The banking subsidiary was founded in 1864 and has the largest deposit market share in Tennessee. The company operates more than 250 bank locations across the Southeast and 29 FTN Financial offices across the U.S. FTB Advisors wealth management group has more than 300 financial professionals and about $4.8 billion in assets under management. FTN Financial is a capital markets industry leader in fixed income sales, trading and strategies for institutional customers in the U.S. and abroad. The company has been ranked by American Banker magazine among the Top 10 Most Reputable U.S. banks and as one of the nation’s best employers by the National Association for Female Executives and Fortune magazine. More information is available at www.FirstHorizon.com.
FHN-G
CONTACT: First Horizon Investor Relations, Aarti Bowman, (901) 523-4017First Horizon Media Relations, Silvia Alvarez, (901) 523-4465
A PDF accompanying this announcement is available at http://ml.globenewswire.com/Resource/Download/bb81751b-5347-40cc-9231-4480724df27f
