Form 8-K FIRST HORIZON CORP For: Jan 20
First Horizon Corporation Reports Fourth Quarter Net Income Available to Common Shareholders of $219 Million,
or EPS of $0.40; $260 Million, or $0.48, on an Adjusted basis*
ROTCE of 14.7% and Adjusted ROTCE of 17.5% with tangible book value per share of $11.00*
2021 net income available to common shareholders of $962 million, or EPS of $1.74;
Adjusted EPS of $2.07 up 70% over 2020*
MEMPHIS, TN (January 20, 2022) – First Horizon Corporation (NYSE: FHN or “First Horizon”) today reported fourth quarter 2021 net income available to common shareholders ("NIAC") of $219 million, or earnings per share of $0.40, compared with third quarter 2021 NIAC of $224 million, or earnings per share of $0.41.
Fourth quarter 2021 results were reduced by a net $41 million after-tax, or $0.08 per share, of notable items largely tied to the IBERIABANK Corporation Merger ("IBKC Merger"), compared with a net $51 million after-tax reduction, or $0.09 per share, in third quarter 2021. Excluding notable items, adjusted fourth quarter 2021 NIAC of $260 million, or $0.48 per share, decreased from $275 million, or $0.50 per share in third quarter. The decrease was led by a $0.03 per share reduction tied to lower provision credit.
Full year 2021 NIAC of $962 million, or earnings per share of $1.74, compares with $822 million, or earnings per share of $1.89, in 2020, largely reflecting the impact of the IBKC merger. 2021 results included a net $179 million after-tax reduction, or $0.32 per share, from notable items largely related to the IBKC merger compared with a net benefit of $294 million, or $0.68 per share, in 2020. On an adjusted basis, full year 2021 NIAC of $1.1 billion, or earnings per share of $2.07, compares with NIAC of $528 million, or $1.22 in 2020 respectively.
“Our solid results for the quarter and the year reflect the underlying momentum in our balanced business model and attractive geographic footprint," said President and Chief Executive Officer Bryan Jordan. "Our continued focus on execution drove improved net interest income, further merger savings and revenue synergies and improved asset quality that more than offset the impact of expected fee income headwinds. We also increased our return of capital to shareholders through common share repurchases."
Jordan continued, “I am grateful to our associates for their unwavering commitment to delivering on our purpose which is to help our clients and communities unlock their full potential through capital and counsel, particularly as we continued to navigate the effects of the pandemic and disruptive natural disasters. Throughout the year, we achieved a number of critical merger milestones, successfully integrating key systems in preparation for the final conversion of clients and signage scheduled for February. We made good strides onboarding new technology and digital capabilities, upgrading operating systems and achieving efficiencies to deliver a differentiated client experience across the organization. I am incredibly proud of the progress we have made and look forward to further capitalizing on the power of business model and footprint."
Jordan concluded, “As we look forward to 2022 and beyond, we believe we are well-positioned to benefit from our enhanced capabilities and expertise, dynamic markets and an improving economic and interest rate environment. We remain focused on growing our core business and selectively transforming by simplifying processes, advancing technology and redeploying investments to achieve higher-growth and return opportunities and deliver top-quartile results.”
*ROTCE, PPNR, Core net interest income (NII), tangible book value per share, loans and leases excluding PPP and/or LMC, and "Adjusted" results are Non-GAAP Financial Measures; NII, Total Revenue, NIM and PPNR are presented on a fully taxable equivalent basis; References to loans include leases and EPS are based on diluted shares; Capital ratios are preliminary. See page 7 for information on our use of Non-GAAP measures and their reconciliation to GAAP beginning on page 23.
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Notable Items
| Notable Items | |||||||||||||||||||||||||||||
Quarterly and Annually, Unaudited ($s in millions, except per share data) | 4Q21 | 3Q21 | 4Q20 | 2021 | 2020 | ||||||||||||||||||||||||
| Summary of Notable Items: | |||||||||||||||||||||||||||||
| Merger/acquisition-related items: | |||||||||||||||||||||||||||||
| Purchase accounting gain (other noninterest income)* | $ | — | $ | — | $ | 1 | $ | (1) | $ | 533 | |||||||||||||||||||
| Branch sale gain (other noninterest income) | 4 | 2 | — | 5 | — | ||||||||||||||||||||||||
| Merger/acquisition expense | (38) | (46) | (34) | (187) | (155) | ||||||||||||||||||||||||
| Non-PCD provision expense | — | — | — | — | (147) | ||||||||||||||||||||||||
| Total Net Merger/acquisition- related items: | (35) | (45) | (33) | (183) | 231 | ||||||||||||||||||||||||
| Other notable items: | |||||||||||||||||||||||||||||
| Gain/(loss) on TruPS redemption (other noninterest income) | (3) | (23) | — | (26) | — | ||||||||||||||||||||||||
| Charitable contributions (other noninterest expense) | — | — | — | — | (15) | ||||||||||||||||||||||||
| Other notable expense (other noninterest expense) | (16) | — | — | (26) | — | ||||||||||||||||||||||||
| Total net other notable items: | (19) | (23) | — | (52) | (15) | ||||||||||||||||||||||||
| Total Notable items (pre-tax) | $ | (54) | $ | (68) | $ | (33) | $ | 235 | $ | 216 | |||||||||||||||||||
| Total Notable items (after-tax) | (41) | (51) | (20) | (179) | 294 | ||||||||||||||||||||||||
| EPS impact of notable items | $ | (0.08) | $ | (0.09) | $ | (0.04) | $ | (0.32) | $ | 0.68 | |||||||||||||||||||
| Numbers may not foot due to rounding | |||||||||||||||||||||||||||||
*' Purchase accounting gain is non-taxable income | |||||||||||||||||||||||||||||
Fourth quarter 2021 GAAP results were reduced by a net $41 million after-tax impact, or $0.08 per share, of notable items compared with a net $51 million impact, or $0.09 per share, in third quarter 2021.
Fourth quarter net notable items were tied to:
•$35 million of net IBKC merger-related items.
•$10 million tied to derivative valuation adjustments related to prior Visa Class-B share sales included in other noninterest expense.
•$6 million deferred compensation costs resulting from litigation tied to a company that was fully divested more than 10 years ago.
•$3 million loss on retirement of legacy IBKC trust preferred securities included in other noninterest income.
Fourth Quarter 2021 Highlights
•Total revenue of $745 million increased $7 million from third quarter 2021 levels driven by a $6 million increase in net interest income. Adjusted revenue of $748 million decreased $15 million largely as expected reductions in fixed income and mortgage banking fees were partially offset by an increase in other noninterest income.
•Net interest income of $498 million increased $6 million, or 1%, from third quarter 2021 levels despite a $5 million reduction in net merger-related and PPP loan portfolio benefits. Core net interest income increased 3% driven by the benefit of lower funding costs.
•Noninterest expense of $528 million increased $2 million from third quarter 2021 driven by an $8 million increase in notable items. Adjusted noninterest expense of $474 million decreased $6 million from third quarter 2021 driven by a $12 million decrease in personnel expense largely tied to lower revenue-based incentives.
•Provision for credit losses was a benefit of $65 million compared with a benefit of $85 million in third quarter 2021, largely reflecting stabilizing economic outlook and overall credit quality improvement.
•Average interest-earning assets of $82.5 billion increased $694 million, or 1%, from third quarter 2021 largely as a $775 million increase in the securities portfolio, a $381 million increase in the trading portfolio and a $260 million increase in loans held for sale ("LHFS") partially offset by an $827 million decrease in average loans driven by a $1.5 billion decrease in Payceck Protection Program loans ("PPP").
•Average loans before the impact of PPP increased $654 million, or 1%, as a $740 million increase in commercial was partially offset by an $87 million decrease in consumer. Average commercial loans excluding PPP increased 2%.
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•Period-end loans before the impact of PPP increased $402 million, or 1%, as a $446 million increase in commercial was partially offset by a $44 million decrease in consumer. Period-end commercial loans excluding PPP and LMC increased 3%.
•Average deposits of $74.6 billion increased $875 million, or 1%, from third quarter 2021 as a $1.8 billion increase in noninterest-bearing deposits was partially offset by a $921 million decrease in interest-bearing deposits. Interest-bearing deposit costs of 11 basis points improved 6 basis points from third quarter 2021.
•Allowance for credit losses to loans ratio of 1.34% decreased from 1.45% at September 30, 2021; the allowance for loan losses to nonperforming loans ratio of 244% increased from 211% at September 30, 2021.
•Net charge-offs of 0.01% in fourth quarter 2021 improved from 0.02% in third quarter 2021; nonperforming loans of $275 million decreased 21% from $347 million and the nonperforming loan ratio of 0.50% improved from 0.63% as of September 30, 2021.
•ROCE of 11.3%; ROTCE of 14.7%; Adjusted ROTCE of 17.5%; CET 1 ratio of 9.9%; and total capital ratio of 12.4%.
•Returned $225 million of capital to common shareholders including share repurchases and dividends.
•Share repurchases of 9 million shares of common stock at a weighted average price of $16.89 in the quarter.
•Tangible book value per share of $11.00 at December 31, 2021 increased 1% from $10.88 at September 30, 2021 despite a $0.24 impact tied to capital return.
Strategic Update
•On track to fully integrate systems in February 2022 and to deliver ~$200 million of targeted annualized net cost saves by 4Q22.
•Achieved $104 million of annualized net cost saves in 2021.
•Committed to delivering additional efficiencies in 2022.
COVID-19 Update
•~$5 billion Paycheck Protection Program loans forgiven in 2021. 2021 period-end PPP loans of $1.0 billion.
•Loans on deferral represented 0.2% of total loans excluding PPP as of December 31, 2021, down from September 30, 2021 levels of 0.3%.
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| SUMMARY RESULTS | ||||||||||||||||||||||||||||||||||||||||||||
| Quarterly, Unaudited | ||||||||||||||||||||||||||||||||||||||||||||
| 4Q21 Change vs. | ||||||||||||||||||||||||||||||||||||||||||||
| ($s in millions, except per share and balance sheet data) | 4Q21 | 3Q21 | 4Q20 | 3Q21 | 4Q20 | |||||||||||||||||||||||||||||||||||||||
| $/bp | % | $/bp | % | |||||||||||||||||||||||||||||||||||||||||
| Income Statement | ||||||||||||||||||||||||||||||||||||||||||||
Interest income - taxable equivalent1 | $ | 534 | $ | 536 | $ | 578 | $ | (2) | — | % | $ | (44) | (8) | % | ||||||||||||||||||||||||||||||
Interest expense- taxable equivalent1 | 33 | 41 | 53 | (8) | (20) | (20) | (38) | |||||||||||||||||||||||||||||||||||||
| Net interest income- taxable equivalent | 502 | 495 | 525 | 7 | 1 | (23) | (4) | |||||||||||||||||||||||||||||||||||||
| Less: Taxable-equivalent adjustment | 3 | 3 | 3 | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net interest income | 498 | 492 | 522 | 6 | 1 | (24) | (5) | |||||||||||||||||||||||||||||||||||||
| Noninterest income | 247 | 247 | 288 | — | — | (41) | (14) | |||||||||||||||||||||||||||||||||||||
| Total revenue | 745 | 738 | 810 | 7 | 1 | (65) | (8) | |||||||||||||||||||||||||||||||||||||
| Noninterest expense | 528 | 526 | 508 | 2 | — | 20 | 4 | |||||||||||||||||||||||||||||||||||||
Pre-provision net revenue4 | 217 | 213 | 302 | 4 | 2 | (85) | (28) | |||||||||||||||||||||||||||||||||||||
Provision for credit losses5 | (65) | (85) | 1 | 20 | 24 | (66) | NM | |||||||||||||||||||||||||||||||||||||
| Income before income taxes | 282 | 298 | 301 | (16) | (5) | (19) | (6) | |||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 53 | 63 | 56 | (10) | (16) | (3) | (6) | |||||||||||||||||||||||||||||||||||||
| Net income | 229 | 235 | 245 | (6) | (3) | (16) | (6) | |||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | 3 | 3 | 3 | — | — | — | 6 | |||||||||||||||||||||||||||||||||||||
| Net income attributable to controlling interest | 227 | 232 | 242 | (5) | (2) | (15) | (6) | |||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | 8 | 8 | 8 | — | — | — | 5 | |||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 219 | $ | 224 | $ | 234 | $ | (5) | (2) | $ | (15) | (7) | ||||||||||||||||||||||||||||||||
Adjusted net income5 | $ | 271 | $ | 286 | $ | 265 | $ | (15) | (5) | $ | 6 | 2 | ||||||||||||||||||||||||||||||||
Adjusted net income available to common shareholders5 | $ | 260 | $ | 275 | $ | 255 | $ | (15) | (5) | % | $ | 6 | 2 | % | ||||||||||||||||||||||||||||||
| Common stock information | ||||||||||||||||||||||||||||||||||||||||||||
| EPS | $ | 0.40 | $ | 0.41 | $ | 0.42 | $ | — | (1) | % | $ | (0.02) | (4) | % | ||||||||||||||||||||||||||||||
Adjusted EPS5 | $ | 0.48 | $ | 0.50 | $ | 0.46 | $ | (0.02) | (4) | % | $ | 0.02 | 4 | % | ||||||||||||||||||||||||||||||
| Diluted shares | 542 | 550 | 556 | (8) | (1) | % | (14) | (3) | % | |||||||||||||||||||||||||||||||||||
| Key performance metrics | ||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 2.42 | % | 2.41 | % | 2.72 | % | 1 | bp | (30) | bp | ||||||||||||||||||||||||||||||||||
| Efficiency ratio | 70.88 | 71.21 | 62.71 | (33) | 817 | |||||||||||||||||||||||||||||||||||||||
Adjusted efficiency ratio6 | 63.31 | 62.87 | 58.34 | 44 | 497 | |||||||||||||||||||||||||||||||||||||||
| Effective income tax rate | 18.63 | 21.13 | 18.70 | (250) | (7) | |||||||||||||||||||||||||||||||||||||||
| Return on average assets | 1.02 | 1.05 | 1.16 | (3) | (14) | |||||||||||||||||||||||||||||||||||||||
Adjusted return on average assets6 | 1.21 | 1.28 | 1.26 | (7) | (5) | |||||||||||||||||||||||||||||||||||||||
| Return on average common equity (“ROCE") | 11.3 | 11.4 | 12.5 | (17) | (127) | |||||||||||||||||||||||||||||||||||||||
Return on average tangible common equity (“ROTCE”)6 | 14.7 | 15.0 | 16.7 | (23) | (201) | |||||||||||||||||||||||||||||||||||||||
Adjusted ROTCE6 | 17.5 | 18.4 | 18.2 | (85) | (67) | |||||||||||||||||||||||||||||||||||||||
| Noninterest income as a % of total revenue | 33.10 | 33.39 | 35.61 | (29) | (251) | |||||||||||||||||||||||||||||||||||||||
Adjusted noninterest income as a % of total revenue6 | 32.95 | % | 35.14 | % | 35.42 | % | (219) | bp | (247) | bp | ||||||||||||||||||||||||||||||||||
| Balance Sheet (billions) | ||||||||||||||||||||||||||||||||||||||||||||
| Average loans | $ | 54.7 | $ | 55.5 | $ | 59.8 | $ | (0.8) | (1) | % | $ | (5.1) | (9) | % | ||||||||||||||||||||||||||||||
| Average deposits | 74.6 | 73.7 | 69.6 | 0.9 | 1 | 5.0 | 7 | |||||||||||||||||||||||||||||||||||||
| Average assets | 89.0 | 88.4 | 83.8 | 0.6 | 1 | 5.2 | 6 | |||||||||||||||||||||||||||||||||||||
| Average common equity | $ | 7.7 | $ | 7.8 | $ | 7.4 | $ | (0.1) | (1) | % | $ | 0.3 | 4 | % | ||||||||||||||||||||||||||||||
| Asset Quality Highlights | ||||||||||||||||||||||||||||||||||||||||||||
| Allowance for credit losses to loans and leases | 1.34 | % | 1.45 | % | 1.80 | % | (11) | bp | (46) | bp | ||||||||||||||||||||||||||||||||||
| Net charge-off ratio | 0.01 | 0.02 | 0.19 | (1) | (18) | |||||||||||||||||||||||||||||||||||||||
| Nonperforming loan and leases ratio | 0.50 | % | 0.63 | % | 0.66 | % | (13) | bp | (16) | bp | ||||||||||||||||||||||||||||||||||
| Capital Ratio Highlights (current quarter is an estimate) | ||||||||||||||||||||||||||||||||||||||||||||
| Common Equity Tier 1 | 9.9 | % | 10.1 | % | 9.7 | % | (15) | bp | 26 | bp | ||||||||||||||||||||||||||||||||||
| Tier 1 | 11.1 | 11.2 | 10.7 | (18) | 32 | |||||||||||||||||||||||||||||||||||||||
| Total Capital | 12.4 | 12.6 | 12.6 | (28) | (21) | |||||||||||||||||||||||||||||||||||||||
| Tier 1 leverage | 8.1 | % | 8.1 | % | 8.2 | % | (6) | bp | (16) | bp | ||||||||||||||||||||||||||||||||||
Numbers may not foot due to rounding.
Certain previously reported amounts have been reclassified to agree with current presentation.
See footnote disclosures on page 22.
4
| SUMMARY RESULTS | ||||||||||||||||||||||||||
| Annual, Unaudited | ||||||||||||||||||||||||||
| ($s in millions, except per share and balance sheet data) | 2021 | 2020 | 2021 vs. 2020 | |||||||||||||||||||||||
| $/bp | % | |||||||||||||||||||||||||
| Income Statement | ||||||||||||||||||||||||||
Interest income - taxable equivalent1 | $ | 2,170 | $ | 1,909 | $ | 261 | 14 | % | ||||||||||||||||||
Interest expense- taxable equivalent1 | 163 | 235 | (72) | (31) | ||||||||||||||||||||||
| Net interest income- taxable equivalent | 2,006 | 1,673 | 333 | 20 | ||||||||||||||||||||||
| Less: Taxable-equivalent adjustment | 12 | 11 | 1 | 9 | ||||||||||||||||||||||
| Net interest income | 1,994 | 1,662 | 332 | 20 | ||||||||||||||||||||||
| Noninterest income | 1,076 | 1,492 | (416) | (28) | ||||||||||||||||||||||
| Total revenue | 3,070 | 3,155 | (85) | (3) | ||||||||||||||||||||||
| Noninterest expense | 2,095 | 1,718 | 377 | 22 | ||||||||||||||||||||||
Pre-provision net revenue4 | 975 | 1,436 | (461) | (32) | ||||||||||||||||||||||
Provision for credit losses5 | (310) | 503 | (813) | NM | ||||||||||||||||||||||
| Income before income taxes | 1,285 | 933 | 352 | 38 | ||||||||||||||||||||||
| Provision for income taxes | 274 | 76 | 198 | NM | ||||||||||||||||||||||
| Net income | 1,010 | 857 | 153 | 18 | ||||||||||||||||||||||
| Net income attributable to noncontrolling interest | 11 | 12 | (1) | (8) | ||||||||||||||||||||||
| Net income attributable to controlling interest | 999 | 845 | 154 | 18 | ||||||||||||||||||||||
| Preferred stock dividends | 37 | 23 | 14 | 61 | ||||||||||||||||||||||
| Net income available to common shareholders | $ | 962 | $ | 822 | $ | 140 | 17 | |||||||||||||||||||
Adjusted net income5 | $ | 1,189 | $ | 563 | $ | 627 | 114 | |||||||||||||||||||
Adjusted net income available to common shareholders5 | $ | 1,140 | $ | 528 | $ | 612 | 116 | % | ||||||||||||||||||
| Common stock information | ||||||||||||||||||||||||||
| EPS | $ | 1.74 | $ | 1.89 | $ | (0.15) | (8) | % | ||||||||||||||||||
Adjusted EPS5 | $ | 2.07 | $ | 1.22 | $ | 0.85 | 70 | % | ||||||||||||||||||
| Diluted shares | 551 | 434 | 117 | 27 | % | |||||||||||||||||||||
| Key performance metrics | ||||||||||||||||||||||||||
| Net interest margin | 2.48 | % | 2.86 | % | (38) | bp | ||||||||||||||||||||
| Efficiency ratio | 68.25 | 54.47 | 1,378 | |||||||||||||||||||||||
Adjusted efficiency ratio6 | 60.64 | 58.82 | 182 | |||||||||||||||||||||||
| Effective income tax rate | 21.36 | 8.15 | 1,321 | |||||||||||||||||||||||
| Return on average assets | 1.15 | 1.33 | (18) | |||||||||||||||||||||||
Adjusted return on average assets6 | 1.36 | 0.87 | 49 | |||||||||||||||||||||||
| Return on average common equity (“ROCE") | 12.5 | 13.7 | (113) | |||||||||||||||||||||||
Return on average tangible common equity (“ROTCE”)6 | 16.5 | 19.0 | (257) | |||||||||||||||||||||||
Adjusted ROTCE6 | 19.3 | 12.2 | 714 | |||||||||||||||||||||||
| Noninterest income as a % of total revenue | 35.04 | 47.31 | (1,227) | |||||||||||||||||||||||
Adjusted noninterest income as a % of total revenue6 | 36.38 | % | 36.45 | % | (7) | bp | ||||||||||||||||||||
| Balance Sheet (billions) | ||||||||||||||||||||||||||
| Average loans | $ | 56.3 | $ | 46.2 | $ | 10.1 | 22 | % | ||||||||||||||||||
| Average deposits | 73.1 | 51.9 | 21.3 | 41 | ||||||||||||||||||||||
| Average assets | 87.6 | 64.3 | 23.3 | 36 | ||||||||||||||||||||||
| Average common equity | $ | 7.7 | $ | 6.0 | $ | 1.7 | 28 | % | ||||||||||||||||||
| Asset Quality Highlights | ||||||||||||||||||||||||||
| Allowance for credit losses to loans and leases | 1.34 | % | 1.80 | % | (11) | bp | ||||||||||||||||||||
| Net charge-off ratio | — | 0.20 | (1,961) | |||||||||||||||||||||||
| Nonperforming loan and leases ratio | 0.50 | % | 0.66 | % | (13) | bp | ||||||||||||||||||||
| Capital Ratio Highlights (current quarter is an estimate) | ||||||||||||||||||||||||||
| Common Equity Tier 1 | 9.9 | % | 9.7 | % | (15) | bp | ||||||||||||||||||||
| Tier 1 | 11.1 | 10.7 | (18) | |||||||||||||||||||||||
| Total Capital | 12.4 | 12.6 | (28) | |||||||||||||||||||||||
| Tier 1 leverage | 8.1 | % | 8.2 | % | (6) | bp | ||||||||||||||||||||
Numbers may not foot due to rounding.
Certain previously reported amounts have been reclassified to agree with current presentation.
See footnote disclosures on page 22.
5
Fourth Quarter 2021 versus Third Quarter 2021
Net interest income
Net interest income of $498 million increased $6 million from third quarter 2021 despite a $5 million reduction in net merger-related and PPP benefits. Core net interest income of $466 million was up $12 million as the benefit of lower funding costs, higher loans held for sale and trading portfolio balances, and higher investment portfolio income more than offset the net impact of loan growth and tighter loan spreads. Net interest margin of 2.42% was relatively stable with third quarter 2021 as the benefit of lower funding costs offset the impact of tighter loan and investment portfolio spreads.
Noninterest income
Noninterest income of $247 million was stable as a net $22 million reduction tied to notable items was largely offset by expected declines in fixed income and mortgage banking and title fees. Adjusted noninterest income of $246 million decreased $22 million driven by expected declines in fixed income and mortgage banking and title fees. Fixed income average daily revenue of $1.1 million remained at relatively healthy levels compared with
$1.3 million in third quarter 2021.
Noninterest expense
Noninterest expense of $528 million increased $2 million from third quarter 2021 driven by a net $8 million decrease in notable items. Adjusted noninterest expense of $474 million decreased $6 million from third quarter 2021 levels as a $12 million reduction in personnel expense was partially offset by growth in outside services and other noninterest expense driven by a $4 million increase tied to demand deposit product accruals, costs tied to markets reopening, and FDIC premium costs partially offset by lower contribution costs and franchise taxes. Results reflect $1 million benefit tied to incremental merger cost savings.
Loans and leases
Average loan and lease balances of $54.7 billion decreased $827 million from third quarter 2021 driven by a $1.5 billion decrease in PPP loans. Loan trends excluding PPP increased $654 million, or 1%, compared to the prior quarter, and 5% annualized, driven by a $740 million increase in commercial. Commercial loan growth excluding PPP reflects a $735 million increase in other C&I with relatively stable loans to mortgage companies ("LMC') and commercial real estate balances. Period-end loans and leases of $54.9 billion decreased $576 million from third quarter 2021 driven by a $979 million reduction in the PPP portfolio and a $622 million decrease in LMC. Before the impact of PPP and LMC, period-end loans increased $1.0 billion, or 8% annualized, reflecting a $1.1 billion increase in commercial. Period-end commercial loan growth excluding PPP and LMC was driven by growth in other commercial and industrial loans.
Deposits
Average deposits of $74.6 billion increased $875 million, or 1% from third quarter 2021 as a $1.8 billion increase in noninterest-bearing deposits was partially offset by a $921 million reduction in interest-bearing deposits. Period-end deposits of $74.9 billion increased $630 million from third quarter 2021 as a $535 million increase in noninterest-bearing and a $95 million increase in interest-bearing deposits. Interest-bearing deposit costs of 11 basis points declined 6 basis points from third quarter 2021 levels reflecting continued discipline on deposit pricing.
Asset quality
Provision for credit losses benefit of $65 million compared to a benefit of $85 million in third quarter 2021, largely reflects stabilizing economic outlook and overall credit quality improvement.
Net charge-offs of $1 million, or 1 basis points in the fourth quarter, decreased from $3 million, or 2 basis points, in the third quarter 2021 reflecting strong asset quality overall.
Nonperforming loans of $275 million decreased $72 million from third quarter 2021 driven by a decrease in the commercial real estate portfolio. Fourth quarter 2021 allowance to nonperforming coverage ratio of 244% compared with 211% in third quarter 2021. Fourth quarter 2021 nonperforming loans to loans ratio of 50 basis points compared with 63 basis points in third quarter 2021.
6
The allowance for credit losses to loans ratio decreased to 1.34% from 1.45% in the third quarter 2021.
Capital
CET1 ratio of 9.9% in fourth quarter 2021 was stable compared with 10.1% in third quarter 2021.
First Horizon returned $225 million in capital to common stockholders during the quarter including $144 million, or 9 million shares, of common stock repurchases.
Income taxes
The fourth quarter 2021 effective tax rate of 18.6% decreased from third quarter 2021 rate of 21.1%. On an adjusted basis, the effective tax rate of 19.5% in the fourth quarter 2021 decreased from 21.8% in third quarter 2021.
Conference call information
Analysts, investors and interested parties may call toll-free starting at 8:15 a.m. CT on January 20 by dialing 1-844-200-6205 (if calling from the U.S.) or 929-526-1599 (if calling from outside the U.S) and entering access code 177675. The conference call will begin at 8:30 a.m. CT.
Participants can also opt to listen to the live audio webcast with the accompanying slide presentation at https://ir.firsthorizon.com/investor-relations/news-and-events/events-and-presentations/.
A replay of the call will be available beginning at noon CT on January 20 until midnight CT on February 3. To listen to the replay, dial 1-866-813-9403 (U.S. callers) or +44-204-525-0658 (international callers); the access code is 953908. A replay of the webcast will also be available on our website by 10:30 am CT on January 20 and will be archived on the site for one year.
Forward-Looking Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements pertain to FHN's beliefs, plans, goals, expectations, and estimates. Forward-looking statements are not a representation of historical information, but instead pertain to future operations, strategies, financial results, or other developments. Forward-looking statements can be identified by the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “should,” “is likely,” “will,” “going forward,” and other expressions that indicate future events and trends.
Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, operational, economic, and competitive uncertainties and contingencies, many of which are beyond FHN’s control, and many of which, with respect to future business decisions and actions (including acquisitions and divestitures), are subject to change and could cause FHN’s actual future results and outcomes to differ materially from those contemplated or implied by forward-looking statements or historical performance. Examples of uncertainties and contingencies include those mentioned: in this document; in Items 2.02 and 7.01 of FHN’s Current Report on Form 8-K to which this document has been filed as an exhibit; in the forepart, and in Items 1, 1A, and 7, of FHN’s most recent Annual Report on Form 10-K; and in the forepart, and in Item 1A of Part II, of FHN’s Quarterly Report(s) on Form 10-Q filed this year.
FHN assumes no obligation to update or revise any forward-looking statements that are made in this document or in any other statement, release, report, or filing from time to time.
Use of Non-GAAP Measures and Regulatory Measures that are not GAAP
Certain measures included in this report are “non-GAAP,” meaning they are not presented in accordance with generally accepted accounting principles 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-
7
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.
The non-GAAP measures presented in this earnings release are fully taxable equivalent measures, core net interest income ("NII"), pre-provision net revenue ("PPNR"), loans and leases excluding paycheck protection program ('PPP") and/or Loans to Mortgage Companies ("LMC"), return on average tangible common equity (“ROTCE”), tangible common equity (“TCE”) to tangible assets (“TA”), tangible book value ("TBV") per common share, and various consolidated and segment results and performance measures and ratios adjusted for notable items.
Presentation of regulatory measures, even those which are not GAAP, provide a meaningful base for comparability to other financial institutions subject to the same regulations as FHN, as demonstrated by their use by banking regulators in reviewing capital adequacy of financial institutions. 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 ("CET1"), 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; and risk-weighted assets, which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios.
Refer to the tabular reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items beginning on page 23.
First Horizon Corp. (NYSE: FHN), with $89.1 billion in assets as of December 31, 2021, is a leading regional financial services company, dedicated to helping our clients, communities and associates unlock their full potential with capital and counsel. Headquartered in Memphis, TN, the banking subsidiary First Horizon Bank operates in 12 states across the southern U.S. The Company and its subsidiaries offer commercial, private banking, consumer, small business, wealth and trust management, retail brokerage, capital markets, fixed income, mortgage, and title insurance services. First Horizon has been recognized as one of the nation's best employers by Fortune and Forbes magazines and a Top 10 Most Reputable U.S. Bank. More information is available at www.FirstHorizon.com.
Contact: Investor Relations, Ellen Taylor (901) 523-4450
Media Relations, Beth Ardoin, (337) 278-6868
8
| CONSOLIDATED INCOME STATEMENT | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarterly/Annually, Unaudited | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4Q21 Change vs. | 2021 vs 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($s in millions, except per share data) | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q21 | 4Q20 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income - taxable equivalent1 | $ | 534 | $ | 536 | $ | 545 | $ | 555 | $ | 578 | $ | (2) | — | % | $ | (44) | (8) | % | $ | 2,170 | $ | 1,909 | $ | 261 | 14 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense- taxable equivalent1 | 33 | 41 | 45 | 45 | 53 | (8) | (20) | (20) | (38) | 163 | 235 | (72) | (31) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income- taxable equivalent | 502 | 495 | 500 | 511 | 525 | 7 | 1 | (23) | (4) | 2,006 | 1,673 | 333 | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less: Taxable-equivalent adjustment | 3 | 3 | 3 | 3 | 3 | — | — | — | — | 12 | 11 | 1 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | 498 | 492 | 497 | 508 | 522 | 6 | 1 | (24) | (5) | 1,994 | 1,662 | 332 | 20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed income | 82 | 96 | 102 | 126 | 104 | (14) | (15) | (22) | (21) | 406 | 423 | (17) | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage banking and title | 28 | 34 | 38 | 53 | 57 | (6) | (18) | (29) | (51) | 154 | 129 | 25 | 19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brokerage, trust, and insurance | 36 | 37 | 35 | 33 | 31 | (1) | (3) | 5 | 14 | 141 | 107 | 34 | 32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Service charges and fees | 56 | 56 | 54 | 53 | 53 | — | — | 3 | 6 | 219 | 174 | 45 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Card and digital banking fees | 19 | 21 | 21 | 17 | 18 | (2) | (10) | 1 | 3 | 78 | 59 | 19 | 32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation income | — | 3 | 7 | 3 | 9 | (3) | (100) | (9) | (100) | 13 | 11 | 2 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other noninterest income2 | 25 | (1) | 27 | 15 | 16 | 26 | NM | 9 | 57 | 66 | 589 | (523) | (89) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest income | 247 | 247 | 285 | 298 | 288 | — | — | (41) | (14) | 1,076 | 1,492 | (416) | (28) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 745 | 738 | 781 | 806 | 810 | 7 | 1 | (65) | (8) | 3,070 | 3,155 | (85) | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Personnel expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Salaries and benefits | 190 | 191 | 191 | 196 | 200 | (1) | (1) | (10) | (5) | 767 | 625 | 142 | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Incentives and commissions | 93 | 101 | 109 | 120 | 110 | (8) | (8) | (17) | (16) | 423 | 396 | 27 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation expense | 7 | 4 | 6 | 3 | 9 | 3 | 75 | (2) | (22) | 20 | 11 | 9 | 82 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total personnel expense | 290 | 296 | 306 | 318 | 319 | (6) | (2) | (29) | (9) | 1,210 | 1,033 | 177 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Occupancy and equipment3 | 74 | 75 | 75 | 76 | 76 | (1) | (1) | (2) | (3) | 300 | 243 | 57 | 23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outside services | 81 | 89 | 63 | 58 | 59 | (8) | (9) | 22 | 38 | 290 | 213 | 77 | 36 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 14 | 14 | 14 | 14 | 15 | — | — | (1) | (5) | 56 | 40 | 16 | 40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other noninterest expense | 70 | 52 | 40 | 78 | 39 | 18 | 35 | 31 | 80 | 239 | 189 | 50 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest expense | 528 | 526 | 497 | 544 | 508 | 2 | — | 20 | 4 | 2,095 | 1,718 | 377 | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-provision net revenue4 | 217 | 213 | 284 | 262 | 302 | 4 | 2 | (85) | (28) | 975 | 1,436 | (461) | (32) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses5 | (65) | (85) | (115) | (45) | 1 | 20 | 24 | (66) | NM | (310) | 503 | (813) | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 282 | 298 | 399 | 307 | 301 | (16) | (5) | (19) | (6) | 1,285 | 933 | 352 | 38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 53 | 63 | 88 | 71 | 56 | (10) | (16) | (3) | (6) | 274 | 76 | 198 | NM | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | 229 | 235 | 311 | 235 | 245 | (6) | (3) | (16) | (6) | 1,010 | 857 | 153 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | 3 | 3 | 3 | 3 | 3 | — | — | — | 6 | 11 | 12 | (1) | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to controlling interest | 227 | 232 | 308 | 233 | 242 | (5) | (2) | (15) | (6) | 999 | 845 | 154 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | 8 | 8 | 13 | 8 | 8 | — | — | — | 5 | 37 | 23 | 14 | 61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 219 | $ | 224 | $ | 295 | $ | 225 | $ | 234 | $ | (5) | (2) | % | $ | (15) | (7) | % | $ | 962 | $ | 822 | $ | 140 | 17 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Share Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EPS | $ | 0.41 | $ | 0.41 | $ | 0.54 | $ | 0.41 | $ | 0.42 | $ | — | (1) | % | $ | (0.01) | (3) | % | $ | 1.76 | $ | 1.90 | $ | (0.14) | (7) | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic shares | 537 | 546 | 550 | 552 | 553 | (9) | (2) | (16) | (3) | 546 | 432 | 114 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted EPS | $ | 0.40 | $ | 0.41 | $ | 0.53 | $ | 0.40 | $ | 0.42 | $ | — | (1) | $ | (0.02) | (4) | $ | 1.74 | $ | 1.89 | $ | (0.15) | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted shares | 542 | 550 | 556 | 557 | 556 | (8) | (1) | % | (14) | (3) | % | 551 | 434 | 117 | 27 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effective tax rate | 18.6 | % | 21.1 | % | 22.0 | % | 23.2 | % | 18.7 | % | 21.4 | % | 8.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Numbers may not foot due to rounding. See footnote disclosures on page 22.
9
ADJUSTED5 FINANCIAL DATA - SEE NOTABLE ITEMS ON PAGE 11 | ||
| Quarterly/Annually, Unaudited | ||
| 4Q21 Change vs. | 2021 vs 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($s in millions, except per share data) | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q21 | 4Q20 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income (FTE)1 | $ | 502 | $ | 495 | $ | 500 | $ | 511 | $ | 525 | $ | 7 | 1 | % | $ | (23) | (4) | % | $ | 2,006 | $ | 1,673 | $ | 333 | 20 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted noninterest income: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed income | 82 | 96 | 102 | 126 | 104 | (14) | (15) | (22) | (21) | 406 | 423 | (17) | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage banking and title | 28 | 34 | 38 | 53 | 57 | (6) | (18) | (29) | (51) | 154 | 129 | 25 | 19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brokerage, trust, and insurance | 36 | 37 | 35 | 33 | 31 | (1) | (3) | 5 | 14 | 141 | 107 | 34 | 32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Service charges and fees | 56 | 56 | 54 | 53 | 53 | — | — | 3 | 6 | 219 | 174 | 45 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Card and digital banking fees | 19 | 21 | 21 | 17 | 18 | (2) | (10) | 1 | 3 | 78 | 59 | 19 | 32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation income | — | 3 | 7 | 3 | 9 | (3) | (100) | (9) | (100) | 13 | 11 | 2 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted other noninterest income | 25 | 21 | 29 | 14 | 15 | 4 | 19 | 10 | 68 | 89 | 56 | 33 | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted total noninterest income | $ | 246 | $ | 268 | $ | 287 | $ | 297 | $ | 288 | $ | (22) | (8) | % | $ | (42) | (14) | % | $ | 1,099 | $ | 960 | $ | 139 | 14 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue (FTE)1 | $ | 748 | $ | 763 | $ | 787 | $ | 808 | $ | 813 | $ | (15) | (2) | % | $ | (65) | (8) | % | $ | 3,105 | $ | 2,633 | $ | 472 | 18 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted noninterest expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted personnel expense: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted salaries and benefits | $ | 189 | $ | 191 | $ | 191 | $ | 195 | $ | 200 | $ | (2) | (1) | % | $ | (11) | (6) | % | $ | 766 | $ | 619 | $ | 147 | 24 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Incentives and commissions | 84 | 92 | 93 | 99 | 89 | (8) | (9) | % | (5) | (6) | 367 | 341 | 26 | 8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred compensation expense | 1 | 4 | 6 | 3 | 9 | (3) | (75) | % | (8) | (89) | 14 | 11 | 3 | 27 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted total personnel expense | 274 | 286 | 290 | 297 | 298 | (12) | (4) | % | (24) | (8) | 1,147 | 971 | 176 | 18 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted occupancy and equipment3 | 73 | 74 | 75 | 72 | 74 | (1) | (1) | % | (1) | (2) | 294 | 238 | 56 | 24 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted outside services | 66 | 65 | 56 | 54 | 52 | 1 | 2 | % | 14 | 27 | 241 | 166 | 75 | 45 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted amortization of intangible assets | 13 | 13 | 13 | 13 | 14 | — | — | % | (1) | (5) | 53 | 38 | 15 | 39 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted other noninterest expense | 46 | 42 | 31 | 28 | 35 | 4 | 10 | % | 11 | 32 | 148 | 136 | 12 | 9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted total noninterest expense | $ | 474 | $ | 480 | $ | 465 | $ | 464 | $ | 474 | $ | (6) | (1) | % | $ | — | — | % | $ | 1,883 | $ | 1,549 | $ | 334 | 22 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted pre-provision net revenue4 | $ | 274 | $ | 284 | $ | 321 | $ | 343 | $ | 339 | $ | (10) | (4) | % | $ | (65) | (19) | % | $ | 1,222 | $ | 1,084 | $ | 138 | 13 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted provision for credit losses5 | $ | (65) | $ | (85) | $ | (115) | $ | (45) | $ | 1 | $ | 20 | 24 | % | $ | (66) | NM | $ | (310) | $ | 356 | $ | (666) | NM | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted net income available to common shareholders | $ | 260 | $ | 275 | $ | 321 | $ | 284 | $ | 255 | $ | (15) | (5) | % | $ | 6 | 2 | % | $ | 1,140 | $ | 528 | $ | 612 | 116 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted Common Share Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted diluted EPS | $ | 0.48 | $ | 0.50 | $ | 0.58 | $ | 0.51 | $ | 0.46 | $ | (0.02) | (4) | % | $ | 0.02 | 4 | % | $ | 2.07 | $ | 1.22 | $ | 0.85 | 70 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Diluted shares | 542 | 550 | 556 | 557 | 556 | (8) | (1) | % | (14) | (3) | % | 551 | 434 | 117 | 27 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted effective tax rate | 19.5 | % | 21.8 | % | 22.2 | % | 23.4 | % | 20.7 | % | 21.8 | % | 21.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted ROTCE | 17.5 | % | 18.4 | % | 22.2 | % | 20.2 | % | 18.2 | % | 19.3 | % | 12.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Adjusted efficiency ratio | 63.3 | % | 62.9 | % | 59.2 | % | 57.5 | % | 58.3 | % | 60.6 | % | 58.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Numbers may not foot due to rounding.
See footnote disclosures on page 22.
10
| NOTABLE ITEMS | ||
| Quarterly/Annually, Unaudited | ||
| (In millions) | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| Summary of Notable Items: | |||||||||||||||||||||||||||||||||||||||||
| Purchase accounting gain (other noninterest income)* | $ | — | $ | — | $ | (2) | $ | 1 | $ | 1 | $ | (1) | $ | 533 | |||||||||||||||||||||||||||
| Gain/(loss) on TRUPS redemption (other noninterest income) | (3) | (23) | — | — | — | (26) | — | ||||||||||||||||||||||||||||||||||
| Branch sale gain (other noninterest income) | 4 | 2 | — | — | — | 5 | — | ||||||||||||||||||||||||||||||||||
| Merger/acquisition expense | (38) | (46) | (32) | (70) | (34) | (187) | (155) | ||||||||||||||||||||||||||||||||||
| Charitable contributions | — | — | — | — | — | — | (15) | ||||||||||||||||||||||||||||||||||
| Other notable expenses** | (16) | — | — | (10) | — | (26) | — | ||||||||||||||||||||||||||||||||||
| Merger/acquisition non-PCD provision expense | — | — | — | — | — | — | (147) | ||||||||||||||||||||||||||||||||||
| Total notable items | $ | (54) | $ | (68) | $ | (34) | $ | (79) | $ | (33) | $ | 235 | $ | 216 | |||||||||||||||||||||||||||
| EPS impact of notable items | $ | (0.08) | $ | (0.09) | $ | (0.05) | $ | (0.11) | $ | (0.04) | $ | (0.32) | $ | 0.68 | |||||||||||||||||||||||||||
Numbers may not foot due to rounding
*' Purchase accounting gain is non-taxable income.
** 4Q21 includes $10 million of Visa derivative valuation expense and $6 million of deferred compensation expense.
| IMPACT OF NOTABLE ITEMS: | ||
| Quarterly/Annually, Unaudited | ||
| (In millions) | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||
| Impacts of Notable Items: | |||||||||||||||||||||||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||||||||||||||||||
| Other noninterest income | $ | — | $ | 22 | $ | 2 | $ | (1) | $ | (1) | $ | 23 | $ | (533) | |||||||||||||||||||||||||||
| Total noninterest income | $ | — | $ | 22 | $ | 2 | $ | (1) | $ | (1) | $ | 23 | $ | (533) | |||||||||||||||||||||||||||
| Noninterest expense: | |||||||||||||||||||||||||||||||||||||||||
| Personnel expenses: | |||||||||||||||||||||||||||||||||||||||||
| Salaries and benefits | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (1) | $ | (7) | |||||||||||||||||||||||||||
| Incentives and commissions | (9) | (10) | (16) | (21) | (21) | (56) | (55) | ||||||||||||||||||||||||||||||||||
| Deferred compensation expense | (6) | — | — | — | — | (6) | — | ||||||||||||||||||||||||||||||||||
| Total personnel expenses | (16) | (10) | (16) | (21) | (21) | (63) | (62) | ||||||||||||||||||||||||||||||||||
Occupancy and equipment3 | — | (1) | — | (4) | (2) | (5) | (6) | ||||||||||||||||||||||||||||||||||
| Outside services | (15) | (24) | (6) | (4) | (7) | (49) | (46) | ||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | (1) | (1) | (1) | (1) | (1) | (3) | (2) | ||||||||||||||||||||||||||||||||||
| Other noninterest expense | (23) | (10) | (9) | (50) | (4) | (92) | (54) | ||||||||||||||||||||||||||||||||||
| Total noninterest expense | $ | (54) | $ | (46) | $ | (32) | $ | (80) | $ | (34) | $ | (212) | $ | (170) | |||||||||||||||||||||||||||
| Provision for credit losses | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (147) | |||||||||||||||||||||||||||
| Income before income taxes | $ | 54 | $ | 68 | $ | 34 | $ | 79 | $ | 33 | $ | 235 | $ | (216) | |||||||||||||||||||||||||||
| Provision for income taxes | 13 | 17 | 8 | 19 | 13 | 56 | 78 | ||||||||||||||||||||||||||||||||||
| Net income/(loss) available to common shareholders | $ | 41 | $ | 51 | $ | 26 | $ | 60 | $ | 20 | $ | 179 | $ | (294) | |||||||||||||||||||||||||||
Numbers may not foot due to rounding
11
| FINANCIAL RATIOS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarterly/Annually, Unaudited | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4Q21 change vs. | 2021 vs. 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q21 | 4Q20 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCIAL RATIOS | $/bp | % | $/bp | % | $/bp | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin | 2.42 | % | 2.41 | % | 2.47 | % | 2.62 | % | 2.72 | % | 1 | bp | (30) | bp | 2.48 | % | 2.86 | % | (38) | bp | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return on average assets | 1.02 | % | 1.05 | % | 1.42 | % | 1.12 | % | 1.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||