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): July 17, 2015

 

 

 

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 First Horizon National Corporation Financial Supplement and Investor Slide Presentation for the quarter ended June 30, 2015, 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 First Horizon National Corporation (“First Horizon”) does not assume any obligation to update in the future the information therein.

 

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 First Horizon’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 June 30, 2015.
 

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: July 17, 2015 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 First Horizon’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 June 30, 2015.
 


Exhibit 99.1

 

 

 

SECOND QUARTER 2015

 

FINANCIAL SUPPLEMENT

 

If you need further information, please contact:

Aarti Bowman, Investor Relations

901-523-4017

aagoorha@firsthorizon.com

 

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 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.

 

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 capital position or financial results of FHN. Non-GAAP measures are reported to FHN's management and Board of Directors through various internal reports.

 

Presentation of regulatory measures, even those which are not GAAP, provides a meaningful base for comparability to other financial institutions subject to the same regulations as FHN, as demonstrated by their use by the various banking regulators in reviewing the 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: 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; common equity tier 1 capital (for periods after fourth quarter 2014), generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; risk weighted assets (“RWA”), which is total assets adjusted for credit 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 regulatory common equity tier 1 capital used in 2015 and later periods is not the same as the non-regulatory, non-GAAP tier 1 common capital commonly used prior to 2015; comparisons between the two are not meaningful.

 

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"), tangible book value per common share, and tier 1 common to RWA (for periods prior to first quarter 2015).

 

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
   

 

3

FHN PERFORMANCE HIGHLIGHTS

 

 

Second Quarter 2015 vs. First Quarter 2015

Consolidated

Net income available to common shareholders was $50.6 million, or $.22 per diluted share in second quarter, compared to net loss of $76.7 million, or $.33 loss per diluted share in first quarter
Net interest income (“NII”) was $166.6 million in second quarter compared to $156.9 million in first quarter; net interest margin (“NIM”) increased to 2.92 percent in second quarter from 2.74 percent in prior quarter
The increase in NII was primarily driven by several factors mentioned in “Regional Banking” below
The increase in NIM was largely the result of a decrease in average excess cash held at the Fed during the quarter
Noninterest income (including securities gains) was $130.3 million in second quarter compared to $129.7 million in prior quarter
Noninterest expense was $218.4 million in second quarter compared to $376.2 million in first quarter primarily due to a $162.5 million decline in litigation and regulatory loss accruals
Period-end loans were $16.9 billion and $16.7 billion in second quarter and first quarter, respectively; average loans grew 4 percent to $16.8 billion in second quarter
Period-end core deposits increased to $18.3 billion in second quarter from $18.2 billion in prior quarter; average core deposits increased 2 percent linked quarter to $18.1 billion in second quarter

 

Regional Banking

Pre-tax income was $70.6 million in second quarter compared to $73.9 million in first quarter; pre-provision net revenue was $87.7 million and $78.8 million in second and first quarters, respectively
Average loans increased 6 percent, or $812.9 million to $14.3 billion in second quarter primarily driven by higher balances of commercial loans including loans to mortgage companies and real estate lending; period-end loans increased 2 percent to $14.5 billion
Average core deposits increased 3 percent to $16.8 billion in second quarter from $16.3 billion in first quarter; period-end core deposits were $16.8 billion in both second and first quarters
Increase in average core deposits was largely driven by the timing of a new product offering in correspondent banking
NII was $165.9 million in second quarter compared to $154.4 million in first quarter; NIM increased slightly to 4.69 percent in second quarter from 4.68 percent in first quarter
The increase in NII was largely driven by higher average balances of loans to mortgage companies, higher commercial loan fees relative to the prior quarter, and more days in second quarter compared to first quarter
Provision expense was $17.1 million compared to $4.9 million in the prior quarter
Overall, the portfolios within the regional bank reflected continued strong performance with low levels of net charge-offs and delinquencies
The increase in quarterly provision is due to a number of factors including loan growth, a continued extension of the loss emergence period (“LEP”) for commercial loans in the current cycle, increased reserves associated with a single larger credit resulting in fraud loss, and was somewhat offset by the continued favorable impact of historically low net charge-off levels
  The LEP is the average amount of time between a borrower experiencing a loss-causing event and a bank incurring a charge-off
Noninterest income increased to $66.0 million in second quarter from $60.2 million in first quarter
The increase was driven by higher non-sufficient funds (“NSF”), brokerage, trust, and bankcard fee income
Noninterest expense was $144.2 million in second quarter compared to $135.8 million in prior quarter
Expense increase was driven by a number of items including an increase in the provision for unfunded commitments, larger negative fair value marks associated with foreclosed real estate, and higher personnel expenses relative to the prior quarter

 

Fixed Income (formerly Capital Markets)

Pre-tax income was $9.1 million in second quarter compared to $11.2 million in first quarter
Fixed income product revenue was $46.7 million in second quarter down from $53.5 million in first quarter
Fixed income product average daily revenue (“ADR”) was $729 thousand and $877 thousand in second quarter and first quarter, respectively
Noninterest expense was $51.2 million in second quarter compared to $54.7 million in the prior quarter
Second quarter decline was driven by lower variable compensation costs and a decrease in FICA

 

Corporate

Pre-tax loss was $27.2 million in second quarter compared to a loss of $24.9 million in prior quarter
NII was negative $17.4 million in second quarter compared to negative $16.1 million in first quarter
Estimated effective duration of the securities portfolio was 3.5 years in second quarter compared to 2.5 years in first quarter
Estimated modified duration of the securities portfolio was 4.2 years in second quarter compared to 3.6 years in prior quarter
Noninterest income was $3.9 million in second quarter, down from $5.4 million in first quarter
Decrease primarily relates to lower deferred compensation income driven by market conditions; changes in deferred compensation income are mirrored by changes in deferred compensation expense
Noninterest expense decreased to $13.8 million in second quarter from $14.2 million in first quarter
4

FHN PERFORMANCE HIGHLIGHTS (continued)

 

 

Second Quarter 2015 vs. First Quarter 2015 (continued)  

 

Non-Strategic

Pre-tax income was $24.1 million in second quarter compared to pre-tax loss of $154.9 million in first quarter
Noninterest expense decreased to $9.2 million in second quarter from $171.6 million in first quarter
The decline was driven by $162.5 million of net loss accruals recognized in first quarter related to the settlement of potential claims related to FHN’s underwriting and origination of FHA-insured mortgage loans
Provision expense declined $15.2 million to a provision credit of $15.1 million
The lower provision was the result of decreased reserves because of sustained levels of low net charge offs, a continuation of positive delinquency trends, and continued stabilization of property values
Noninterest income was $4.4 million in second quarter, up from $2.5 million in first quarter
Second quarter includes a $2.7 million pre-tax gain on the sale of property
NII was $13.8 million in second quarter compared to $14.2 million in first quarter

 

Asset Quality

Allowance for loan losses declined to $221.4 million in second quarter from $228.3 million in first quarter; the allowance to loans ratio was 131 basis points in second quarter compared to 136 basis points in first quarter
The decline in the allowance was primarily driven by a $23.8 million reduction of consumer real estate reserves which was partially offset by an increase in the allowance associated with the regional bank’s commercial portfolio
Net charge-offs (“NCOs”) were $9.0 million in second quarter compared to $9.1 million in first quarter; annualized net charge-offs decreased to 21 basis points of average loans in second quarter from 23 basis points in prior quarter
Within the Regional Bank, net charge-offs were $10.3 million in the second quarter compared to $5.7 million in the first quarter
The increase was largely driven by one C&I credit and also higher net charge-offs within the credit card portfolio as FHN recognized charge-offs on a sub segment of the portfolio which had previously been reserved for
Nonperforming loans (“NPLs”) in the portfolio were $203.1 million in the second quarter compared to $200.2 million in the first quarter
Commercial NPLs increased $8.2 million from the first quarter due to a $7.1 million increase in the regional bank
Consumer NPLs decreased $5.3 million from the first quarter due to a $3.3 million decline in non-strategic consumer real estate
Nonperforming assets (“NPAs”), including loans held-for-sale, increased to $238.5 million in second quarter from $236.8 million in the prior quarter
The increase in NPAs largely corresponded to the increase in NPLs
Total 30+ delinquencies decreased to $71.4 million in second quarter compared to $78.0 million in prior quarter
Consumer delinquencies declined by $5.8 million and was primarily driven by improvement in permanent mortgage and consumer real estate
Troubled debt restructurings (“TDRs”) decreased to $391.4 million in second quarter from $395.8 million in prior quarter

 

Taxes

The effective tax rates (“ETR”) for second quarter and first quarter were 28.21 percent and 23.52 percent, respectively. Since pre-tax income is the most important component in determining the ETR, the comparison of the tax rate from period to period, by itself, will not provide meaningful information unless pre-tax income is fairly consistent. The rates reflect the favorable effect from permanent benefits.
Permanent benefits primarily consist of: proceeds from life insurance, tax-exempt income, utilization of capital loss carryover, and tax credit investments
The expected annual ETR declined during second quarter resulting in $3.4 million of tax expense to reduce the first quarter tax benefit (associated with FHN’s pre-tax loss) to the lower rate. This contributed to a higher ETR in second quarter compared to the prior quarter
Second quarter tax expense includes $2.8 million of discrete tax expenses that should not affect the remainder of 2015

 

Capital and Liquidity

Paid $0.06 per common share quarterly dividend ($14.0 million) on July 1, 2015
Paid aggregate preferred quarterly dividend of $1.6 million on July 10, 2015
No shares were repurchased in second quarter under the $100 million share repurchase program announced in January 2014 due to restrictions related to the pending acquisition of TrustAtlantic Financial Corporation
Cumulative shares repurchased since the program’s inception are $54.3 million with a volume weighted average price of $12.79 per share (before $.02 per share broker commission)
Capital ratios (regulatory capital ratios based on period-end balances under the Basel III risk-based capital rules as phased-in) (current quarter is an estimate)
Tangible common equity to tangible assets of 7.80 percent in second quarter compared to 7.57 percent in prior quarter
Common Equity Tier 1 of 10.41 percent in second quarter compared to 10.31 percent in prior quarter
Tier 1 of 11.98 percent in second quarter compared to 11.85 percent in prior quarter
Total Capital of 13.95 percent in second quarter compared to 14.08 percent in prior quarter
Leverage of 9.86 percent in second quarter compared to 9.59 percent in prior quarter
5

FHN CONSOLIDATED INCOME STATEMENT

Quarterly, Unaudited

 

                      2Q15 Changes vs.
(Dollars in thousands, except per share data) 2Q15   1Q15   4Q14   3Q14   2Q14   1Q15   2Q14
                               
Interest income $187,030   $178,068   $179,448   $178,858   $177,359   5  %   5  %
Less: interest expense 20,390   21,202   20,398   19,317   20,591   (4 )%   (1 )%
Net interest income 166,640   156,866   159,050   159,541   156,768   6  %   6  %
Provision for loan losses 2,000   5,000   6,000   6,000   5,000   (60 )%   (60 )%
Net interest income after provision for loan losses 164,640   151,866   153,050   153,541   151,768   8  %   8  %
Noninterest income:                              
Fixed income 56,241   61,619   48,486   47,589   47,680   (9 )%   18  %
Deposit transactions and cash management 28,430   26,551   29,038   28,546   27,911   7  %   2  %
Brokerage, management fees and commissions 12,456   11,399   11,647   12,333   12,843   9  %   (3 )%
Mortgage banking (a) 376   1,584   1,808   41,559   8,861   (76 )%   (96 )%
Trust services and investment management 7,416   6,698   6,945   6,779   7,309   11  %   1  %
Bankcard income (b) 5,884   5,186   5,737   5,521   7,919   13  %   (26 )%
Bank-owned life insurance 3,391   3,462   3,503   3,547   3,312   (2 )%   2  %
Other service charges 3,043   2,848   2,830   3,064   3,143   7  %   (3 )%
Insurance commissions 654   596   616   593   611   10  %   7  %
Securities gains/(losses), net 8   276   -   (862) (1,923) (97 )%   NM  
Other (c) 12,402   9,470   8,988   9,146   9,235   31  %   34  %
Total noninterest income 130,301   129,689   119,598   157,815   126,901   *     3  %
Adjusted gross income after provision for loan losses 294,941   281,555   272,648   311,356   278,669   5  %   6  %
Noninterest expense:                              
Employee compensation, incentives, and benefits 127,970   131,444   118,529   120,742   119,659   (3 )%   7  %
Repurchase and foreclosure provision (d) -   -   -   (4,300)   -   NM     NM  
Legal fees 4,509   3,551   5,633   4,276   1,533   27  %   NM  
Professional fees 5,218   3,706   6,919   6,187   4,618   41  %   13  %
Occupancy 11,764   12,218   12,077   12,405   11,944   (4 )%   (2 )%
Computer software 11,340   10,942   10,574   10,614   11,087   4  %   2  %
Contract employment and outsourcing 3,337   4,584   4,578   5,199   5,318   (27 )%   (37 )%
Operations services 10,033   9,337   8,417   9,044   8,804   7  %   14  %
Equipment rentals, depreciation, and maintenance 7,983   7,220   7,523   7,150   7,442   11  %   7  %
FDIC premium expense (e) 4,952   3,448   2,881   3,456   1,136   44  %   NM  
Advertising and public relations 4,349   4,733   4,077   4,386   4,312   (8 )%   1  %
Communications and courier 3,801   3,876   4,274   3,628   3,948   (2 )%   (4 )%
Foreclosed real estate 1,329   (131)   492   788   439   NM     NM  
Amortization of intangible assets 1,298   1,298   1,225   982   981   *     32  %
Other (c) 20,511   179,995   20,110   59,459   (18,059)   (89 )%   NM  
Total noninterest expense 218,394   376,221   207,309   244,016   163,162   (42 )%   34  %
Income/(loss) before income taxes 76,547   (94,666)   65,339   67,340   115,507   NM     (34 )%
Provision/(benefit) for income taxes 21,590   (22,261)   13,699   16,842   33,578   NM     (36 )%
Net income/(loss) 54,957   (72,405)   51,640   50,498   81,929   NM     (33 )%
Net income attributable to noncontrolling interest 2,851   2,758   2,980   2,875   2,859   3  %   *  
Net income/(loss) attributable to controlling interest 52,106   (75,163)   48,660   47,623   79,070   NM     (34 )%
Preferred stock dividends 1,550   1,550   1,550   1,550   1,550   *     *  
Net income/(loss) available to common shareholders $50,556   $(76,713)   $47,110   $46,073   $77,520   NM     (35 )%
Common Stock Data                              
EPS $0.22   $(0.33)   $0.20   $0.20   $0.33   NM     (33 )%
Basic Shares (thousands) (f) 232,800   232,816   233,693   235,329   235,797   *     (1 )%
Diluted EPS $0.22   $(0.33)   $0.20   $0.19   $0.33   NM     (33 )%
Diluted shares (thousands) 234,669   232,816   235,448   236,862   237,250   1  %   (1 )%
Key Ratios & Other                              
Return on average assets (annualized) (g) 0.87 % (1.15) % 0.83 % 0.84 % 1.39 %          
Return on average common equity (annualized) (g) 9.56 % (14.04) % 8.27 % 8.16 % 14.35 %          
Return on average tangible common equity (annualized) (g) (h) 10.41 % (15.24) % 8.92 % 8.79 % 15.51 %          
Fee income to total revenue (g) 43.88 % 45.21 % 42.92 % 49.86 % 45.11 %          
Efficiency ratio (g) 73.55 % NM   74.40 % 76.68 % 57.13 %          
Full time equivalent employees 4,212   4,226   4,250   4,193   4,216            

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

NM - Not meaningful

* Amount is less than one percent.
(a) 3Q14 includes a $39.7 million gain on the sales of mortgage loans HFS; 2Q14 includes an $8.2 million positive fair value adjustment to the held-for-sale portfolio.
(b) 2Q14 includes $2.8 million of Visa volume incentives.
(c) Refer to the Other Income and Other Expense table on page 7 for additional information.
(d) 3Q14 expense reversal associated with the settlement of certain repurchase claims.
(e) 2Q14 includes the effect of $3.3 million of FDIC premium refunds.
(f) In periods prior to 2Q15, decreases primarily relate to shares purchased under share repurchase programs.
(g) See Glossary of Terms for definitions of Key Ratios.
(h) Refer to the Non-GAAP to GAAP reconciliation on page 22 of this financial supplement.
6
FHN OTHER INCOME AND OTHER EXPENSE                    
Quarterly, Unaudited                            
                             
                       2Q15 Changes vs.
(Thousands)  2Q15   1Q15   4Q14   3Q14   2Q14   1Q15   2Q14 
                                    
Other Income                                   
ATM and interchange fees  $3,025   $2,761   $2,961   $2,739   $2,746    10 %   10 %
Electronic banking fees   1,459    1,428    1,561    1,560    1,535    2 %   (5)%
Letter of credit fees   1,532    1,123    1,111    917    1,173    36 %   31 %
Deferred compensation (a)   (35)   1,033    242    (41)   1,184    NM    NM 
Gain /(loss) on extinguishment of debt           184            NM    NM 
Other (b)   6,421    3,125    2,929    3,971    2,597    NM    NM 
Total  $12,402   $9,470   $8,988   $9,146   $9,235    31 %   34 %
                                    
Other Expense                                   
Litigation and regulatory matters (c)  $   $162,500   $   $35,390   $(38,200)    NM    NM 
Other insurance and taxes   3,455    3,329    2,722    3,909    3,209    4 %   8 %
Tax credit investments   549    395    589    311    862    39 %   (36)%
Travel and entertainment   2,632    1,614    2,462    2,164    2,645    63 %   * 
Employee training and dues   1,449    1,132    1,258    1,194    1,200    28 %   21 %
Customer relations   1,505    1,314    1,397    1,406    1,680    15 %   (10)%
Miscellaneous loan costs   734    361    540    597    839    NM    (13)%
Supplies   880    927    1,046    779    804    (5)%   9 %
Other (d)   9,307    8,423    10,096    13,709    8,902    10 %   5 %
Total  $20,511   $179,995   $20,110   $59,459   $(18,059)    (89)%   NM 

NM - Not meaningful

  * Amount is less than one percent
(a)  Amounts driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense.
(b) 2Q15 includes a $2.7 million pre-tax gain on sale of property.
(c) 1Q15 loss accruals relate to the settlement of potential claims related to FHN’s underwriting and origination of FHA-insured mortgage loans; 3Q14 includes $50.0 million of loss accruals related to legal matters, partially offset by $15.0 million of expense reversals associated with agreements with insurance companies for the recovery of expenses FHN incurred related to litigation losses in previous periods; 2Q14 includes $38.6 million expense recovery related to the Sentinel litigation matter which was settled in 2011.
(d) 3Q14 includes $3.2 million of negative valuation adjustments associated with derivatives related to prior sales of Visa Class B shares.
7

FHN CONSOLIDATED PERIOD-END BALANCE SHEET

Quarterly, Unaudited

                               
                      2Q15 Changes vs. 
(Thousands) 2Q15   1Q15   4Q14   3Q14   2Q14   1Q15 2Q14   
                               
Assets:                              
Investment securities $3,653,166   $3,676,630   $3,560,905   $3,538,957   $3,580,821   (1) % 2 %  
Loans held-for-sale (a) 127,196   133,958   141,285   151,915   358,945   (5) % (65) %  
Loans, net of unearned income 16,936,772   16,732,123   16,230,166   15,812,017   15,795,709   1 % 7 %  
Federal funds sold 77,039   43,052   63,080   55,242   51,537   79 % 49 %  
Securities purchased under agreements to resell 816,991   831,541   659,154   561,802   624,477   (2) % 31 %  
Interest-bearing cash (b) 344,944   438,633   1,621,967   275,485   255,920   (21) % 35 %  
Trading securities 1,133,490   1,532,463   1,194,391   1,338,022   1,150,280   (26) % (1) %  
Total earning assets 23,089,598   23,388,400   23,470,948   21,733,440   21,817,689   (1) % 6 %  
Cash and due from banks 274,256   282,800   349,171   292,687   417,108   (3) % (34) %  
Fixed income receivables (c) 91,069   190,662   42,488   197,507   174,224   (52) % (48) %  
Goodwill (d) 145,932   145,932   145,932   141,943   141,943   *   3 %  
Other intangible assets, net (d) 26,922   28,220   29,518   19,044   20,025   (5) % 34 %  
Premises and equipment, net (d) (e) 269,507   301,069   302,996   295,833   300,533   (10) % (10) %  
Real estate acquired by foreclosure 40,268   39,776   39,922   47,996   57,552   1 % (30) %  
Allowance for loan losses (221,351)   (228,328)   (232,448)   (238,641)   (243,628)   (3) % (9) %  
Derivative assets 115,230   148,153   134,088   137,742   162,067   (22) % (29) %  
Other assets 1,408,336   1,419,204   1,385,572   1,355,046   1,370,832   (1) % 3 %  
Total assets $25,239,767   $25,715,888   $25,668,187   $23,982,597   $24,218,345   (2) % 4 %  
                               
Liabilities and Equity:                              
Deposits:                              
Savings $7,462,642   $7,428,000   $7,455,354   $6,371,156   $6,317,197   *   18 %  
Other interest-bearing deposits 4,675,742   4,939,240   4,140,991   3,955,152   4,014,071   (5) % 16 %  
Time deposits 769,132   792,914   831,666   767,699   808,822   (3) % (5) %  
Total interest-bearing core deposits 12,907,516   13,160,154   12,428,011   11,094,007   11,140,090   (2) % 16 %  
Noninterest-bearing deposits 5,366,936   5,060,897   5,195,656   4,603,826   4,513,800   6 % 19 %  
Total core deposits (f) 18,274,452   18,221,051   17,623,667   15,697,833   15,653,890   *   17 %  
Certificates of deposit $100,000 and more 400,021   417,503   445,272   446,938   503,597   (4) % (21) %  
Total deposits 18,674,473   18,638,554   18,068,939   16,144,771   16,157,487   *   16 %  
Federal funds purchased 556,862   703,352   1,037,052   928,159   947,946   (21) % (41) %  
Securities sold under agreements to repurchase 311,760   309,297   562,214   479,384   475,530   1 % (34) %  
Trading liabilities 732,564   813,141   594,314   532,234   706,119   (10) % 4 %  
Other short-term borrowings (g) 150,350   158,745   157,218   790,080   1,073,250   (5) % (86) %  
Term borrowings (h) 1,557,647   1,573,215   1,880,105   1,491,138   1,501,209   (1) % 4 %  
Fixed income payables (c) 54,301   91,176   18,157   329,960   95,299   (40) % (43) %  
Derivative liabilities 109,815   133,273   119,239   123,442   138,336   (18) % (21) %  
Other liabilities 574,090   795,878   649,359   551,615   507,894   (28) % 13 %  
Total liabilities 22,721,862   23,216,631   23,086,597   21,370,783   21,603,070   (2) % 5 %  
Equity:                              
Common stock (i) 146,263   145,937   146,387   147,030   148,217   *   (1) %  
Capital surplus (i) 1,371,712   1,370,711   1,380,809   1,390,081   1,416,012   *   (3) %  
Undivided profits 797,123   760,713   851,585   816,483   782,102   5 % 2 %  
Accumulated other comprehensive loss, net (188,248)   (169,159)   (188,246)   (132,835)   (122,111)   11 % 54 %  
Preferred stock 95,624   95,624   95,624   95,624   95,624   *   *    
Noncontrolling interest (j) 295,431   295,431   295,431   295,431   295,431   *   *    
Total equity 2,517,905   2,499,257   2,581,590   2,611,814   2,615,275   1 % (4) %  
Total liabilities and equity $25,239,767   $25,715,888   $25,668,187   $23,982,597   $24,218,345   (2) % 4 %  
 * Amount is less than one percent.
(a) 3Q14 decrease related to the sale of mortgage loans HFS.
(b) Includes excess balances held at Fed. 4Q14 increase driven by inflow of customer deposits and proceeds from the issuance of senior notes.
(c) Period-end balances fluctuate based on the level of pending unsettled trades.
(d) 4Q14 increase related to the acquisition of bank branches.
(e) 2Q15 decrease related to sale of property.
(f) 2Q15 average core deposits were $18.1 billion.
(g) 3Q14 and 2Q14 include increased FHLB borrowings as a result of loan growth and deposit fluctuations.
(h) In 1Q15 $304 million of FTBNA subordinated notes matured. In 4Q14 FTBNA issued $400 million of senior bank notes.
(i) In periods prior to 2Q15, decreases primarily relate to shares purchased under share repurchase programs.
(j) Consists of preferred stock of subsidiaries.
8

FHN CONSOLIDATED AVERAGE BALANCE SHEET

Quarterly, Unaudited

               
                      2Q15 Changes vs.
(Thousands) 2Q15   1Q15   4Q14   3Q14   2Q14   1Q15   2Q14  
                                 
Assets:                                
Earning assets:                                
Loans, net of unearned income:                                
Commercial, financial, and industrial (C&I) $9,675,107   $8,965,657   $8,584,065   $8,395,553   $7,994,788   8 %   21 %  
Commercial real estate 1,371,207   1,290,246   1,287,816   1,260,715   1,203,631   6 %   14 %  
Consumer real estate 4,893,285   4,988,532   5,087,104   5,173,088   5,230,107   (2) %   (6) %  
Permanent mortgage 500,093   526,616   552,065   581,876   607,296   (5) %   (18) %  
Credit card and other 350,247   351,503   357,321   352,133   345,748   *     1 %  
Total loans, net of unearned income (a) 16,789,939   16,122,554   15,868,371   15,763,365   15,381,570   4 %   9 %  
Loans held-for-sale (b) 129,519   138,373   144,061   318,743   355,822   (6) %   (64) %  
Investment securities:                                
U.S. treasuries 100   100   100   26,764   39,995   *     NM    
U.S. government agencies 3,505,033   3,391,297   3,363,053   3,345,739   3,330,598   3 %   5 %  
States and municipalities 14,074   14,410   14,493   17,458   19,430   (2) %   (28) %  
Other 181,749   181,858   181,806   184,934   189,449   *     (4) %  
Total investment securities 3,700,956   3,587,665   3,559,452   3,574,895   3,579,472   3 %   3 %  
Trading securities 1,363,165   1,371,514   1,182,762   1,060,123   1,118,425   (1) %   22 %  
Other earning assets:                                
Federal funds sold 31,765   23,710   26,543   37,274   29,490   34 %   8 %  
Securities purchased under agreements to resell 760,338   777,989   672,764   644,022   664,194   (2) %   14 %  
Interest-bearing cash (c) 465,596   1,451,826   1,011,983   288,192   363,674   (68) %   28 %  
Total other earning assets 1,257,699   2,253,525   1,711,290   969,488   1,057,358   (44) %   19 %  
Total earning assets 23,241,278   23,473,631   22,465,936   21,686,614   21,492,647   (1) %   8 %  
Allowance for loan losses (227,765)   (232,655)   (238,850)   (240,433)   (246,779)   (2) %   (8) %  
Cash and due from banks 315,730   342,512   341,338   321,427   308,890   (8) %   2 %  
Fixed income receivables 51,913   48,937   63,384   55,937   46,864   6 %   11 %  
Premises and equipment, net 292,874   301,989   301,512   297,636   299,899   (3) %   (2) %  
Derivative assets 138,935   139,086   141,146   154,988   165,684   *     (16) %  
Other assets 1,601,083   1,571,104   1,538,791   1,526,165   1,580,093   2 %   1 %  
Total assets $25,414,048   $25,644,604   $24,613,257   $23,802,334   $23,647,298   (1) %   7 %  
                                 
Liabilities and equity:                                
Interest-bearing liabilities:                                
Interest-bearing deposits:                                
Savings $7,437,016   $7,377,045   $6,929,750   $6,327,556   $6,427,265   1 %   16 %  
Other interest-bearing deposits 4,741,920   4,483,907   3,895,022   3,697,854   3,779,293   6 %   25 %  
Time deposits 780,355   812,749   830,412   785,154   859,551   (4) %   (9) %  
Total interest-bearing core deposits 12,959,291   12,673,701   11,655,184   10,810,564   11,066,109   2 %   17 %  
Certificates of deposit $100,000 and more 405,696   423,480   451,669   464,792   512,527   (4) %   (21) %  
Federal funds purchased 649,464   1,079,531   1,137,909   1,028,852   1,080,347   (40) %   (40) %  
Securities sold under agreements to repurchase 339,874   474,448   471,712   406,219   458,608   (28) %   (26) %  
Trading liabilities 713,133   728,553   634,375   621,880   671,930   (2) %   6 %  
Other short-term borrowings (d) 227,650   165,408   302,353   1,093,014   540,389   38 %   (58) %  
Term borrowings (e) 1,570,953   1,621,983   1,664,924   1,499,959   1,505,860   (3) %   4 %  
Total interest-bearing liabilities 16,866,061   17,167,104   16,318,126   15,925,280   15,835,770   (2) %   7 %  
Noninterest-bearing deposits 5,189,939   5,098,361   4,974,748   4,602,292   4,547,838   2 %   14 %  
Fixed income payables 27,608   34,800   40,273   36,762   34,293   (21) %   (19) %  
Derivative liabilities 123,397   124,305   124,530   130,997   138,282   (1) %   (11) %  
Other liabilities 695,114   612,513   503,851   475,162   533,053   13 %   30 %  
Total liabilities 22,902,119   23,037,083   21,961,528   21,170,493   21,089,236   (1) %   9 %  
Equity:                                
Common stock (f) 146,146   146,225   146,789   147,820   148,085   *     (1) %  
Capital surplus (f) 1,370,653   1,377,178   1,387,116   1,408,682   1,416,811   *     (3) %  
Undivided profits 775,881   868,605   846,656   810,164   733,095   (11) %   6 %  
Accumulated other comprehensive loss, net (171,806)   (175,542)   (119,887)   (125,880)   (130,984)   (2) %   31 %  
Preferred stock 95,624   95,624   95,624   95,624   95,624   *     *    
Noncontrolling interest (g) 295,431   295,431   295,431   295,431   295,431   *     *    
Total equity 2,511,929   2,607,521   2,651,729   2,631,841   2,558,062   (4) %   (2) %  
Total liabilities and equity $25,414,048   $25,644,604   $24,613,257   $23,802,334   $23,647,298   (1) %   7 %  
NM - Not meaningful
 * Amount is less than one percent.
(a) Includes loans on nonaccrual status.
(b) 4Q14 decrease related to the sale of mortgage loans HFS in third quarter.
(c) Includes excess balances held at Fed. 1Q15 and 4Q14 increase driven by inflow of customer deposits and proceeds from the issuance of senior notes in fourth quarter.
(d) 3Q14 and 2Q14 include increased FHLB borrowings as a result of loan growth and deposit fluctuations.
(e) In 1Q15 $304 million of FTBNA subordinated notes matured. In 4Q14 FTBNA issued $400 million of senior bank notes.
(f) Decreases primarily relate to shares purchased under share repurchase programs.
(g) Consists of preferred stock of subsidiaries.
9

FHN CONSOLIDATED NET INTEREST INCOME (a)

Quarterly, Unaudited

               
                      2Q15 Changes vs. 
(Thousands) 2Q15   1Q15   4Q14   3Q14   2Q14   1Q15   2Q14   
                                 
Interest Income:                                
Loans, net of unearned income (b) $155,565   $146,192   $148,078   $146,931   $144,975   6 %   7 %  
Loans held-for-sale 1,350   1,491   1,483   3,263   3,209   (9) %   (58) %  
Investment securities:                                
U.S. treasuries -   -   -   5   7   NM     NM    
U.S. government agencies 21,432   20,955   21,317   21,376   21,530   2 %   *    
States and municipalities 97   125   159   109   97   (22) %   *    
Other 1,853   1,876   1,875   1,866   2,103   (1) %   (12) %  
Total investment securities 23,382   22,956   23,351   23,356   23,737   2 %   (1) %  
Trading securities 9,289   9,281   8,701   7,944   7,839   *     18 %  
Other earning assets:                                
Federal funds sold 79   57   69   92   73   39 %   8 %  
Securities purchased under agreements to resell (c) (254)   (252)   (217)   (363)   (218)   (1) %   (17) %  
Interest-bearing cash 267   874   611   134   182   (69) %   47 %  
Total other earning assets 92   679   463   (137)   37   (86) %   NM    
Interest income $189,678   $180,599   $182,076   $181,357   $179,797   5 %   5 %  
                                 
Interest Expense:                                
Interest-bearing deposits:                                
Savings $2,970   $3,307   $3,087   $2,600   $2,792   (10) %   6 %  
Other interest-bearing deposits 1,104   957   760   754   746   15 %   48 %  
Time deposits 1,324   1,432   1,742   1,786   2,486   (8) %   (47) %  
Total interest-bearing core deposits 5,398   5,696   5,589   5,140   6,024   (5) %   (10) %  
Certificates of deposit $100,000 and more 830   882   513   685   869   (6) %   (4) %  
Federal funds purchased 408   673   729   654   683   (39) %   (40) %  
Securities sold under agreements to repurchase 42   95   83   63   109   (56) %   (61) %  
Trading liabilities 3,770   3,914   3,950   3,782   4,087   (4) %   (8) %  
Other short-term borrowings 276   278   388   548   403   (1) %   (32) %  
Term borrowings (d) 9,666   9,664   9,146   8,445   8,416   *     15 %  
Interest expense 20,390   21,202   20,398   19,317   20,591   (4) %   (1) %  
Net interest income - tax equivalent basis 169,288   159,397   161,678   162,040   159,206   6 %   6 %  
Fully taxable equivalent adjustment (2,648)   (2,531)   (2,628)   (2,499)   (2,438)   (5) %   (9) %  
Net interest income $166,640   $156,866   $159,050   $159,541   $156,768   6 %   6 %  
NM - Not meaningful
* Amount is less than one percent.
(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) Driven by negative market rates on reverse repurchase agreements.
(d) 4Q14 increase related to the issuance of $400 million of senior notes.
10

FHN CONSOLIDATED AVERAGE BALANCE SHEET: YIELDS AND RATES

Quarterly, Unaudited

     
                               
  2Q15     1Q15     4Q14     3Q14     2Q14    
                               
Assets:                              
Earning assets (a):                              
Loans, net of unearned income (b):                              
Commercial loans 3.60 %   3.50 %   3.55 %   3.51 %   3.59 %  
Retail loans 3.94     3.96     3.97     4.01     4.06    
Total loans, net of unearned income (c) 3.71     3.67     3.71     3.70     3.78    
Loans held-for-sale 4.17     4.31     4.12     4.09     3.61    
Investment securities:                              
U.S. treasuries NM     NM     NM     0.07     0.07    
U.S. government agencies 2.45     2.47     2.54     2.56     2.59    
States and municipalities 2.77     3.46     4.38     2.50     1.99    
Other 4.08     4.13     4.13     4.04     4.44    
Total investment securities 2.53     2.56     2.62     2.61     2.65    
Trading securities 2.73     2.71     2.94     3.00     2.80    
Other earning assets:                              
Federal funds sold 1.00     0.97     1.02     0.98     1.00    
Securities purchased under agreements to resell (d) (0.13)     (0.13)     (0.13)     (0.22)     (0.13)    
Interest-bearing cash 0.23     0.24     0.24     0.19     0.20    
Total other earning assets 0.03     0.12     0.11     (0.06)     0.01    
Interest income/total earning assets 3.27 %   3.11 %   3.22 %   3.33 %   3.35 %  
                               
Liabilities:                              
Interest-bearing liabilities:                              
Interest-bearing deposits:                              
Savings 0.16 %   0.18 %   0.18 %   0.16 %   0.17 %  
Other interest-bearing deposits 0.09     0.09     0.08     0.08     0.08    
Time deposits 0.68     0.71     0.83     0.90     1.16    
Total interest-bearing core deposits 0.17     0.18     0.19     0.19     0.22    
Certificates of deposit $100,000 and more 0.82     0.84     0.45     0.59     0.68    
Federal funds purchased 0.25     0.25     0.25     0.25     0.25    
Securities sold under agreements to repurchase 0.05     0.08     0.07     0.06     0.10    
Trading liabilities 2.12     2.18     2.47     2.41     2.44    
Other short-term borrowings 0.49     0.68     0.51     0.20     0.30    
Term borrowings (e) 2.47     2.39     2.20     2.25     2.24    
Interest expense/total interest-bearing liabilities 0.48     0.50     0.50     0.48     0.52    
Net interest spread 2.79 %   2.61 %   2.72 %   2.85 %   2.83 %  
Effect of interest-free sources used to fund earning assets 0.13     0.13     0.14     0.12     0.14    
Net interest margin 2.92 %   2.74 %   2.86 %   2.97 %   2.97 %  
Yields are adjusted to a FTE basis assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.
NM - Not meaningful
(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) Driven by negative market rates on reverse repurchase agreements.
(e) Rates are expressed net of unamortized debenture cost for term borrowings.
11

FHN CAPITAL HIGHLIGHTS

Quarterly, Unaudited

                                           
                                2Q15 Changes vs.  
(Dollars and shares in thousands) 2Q15     1Q15     4Q14     3Q14     2Q14     1Q15   2Q14    
                                           
Common equity tier 1 capital (a) (c) $2,172,769     $2,133,554     N/A     N/A     N/A     2 %   NM    
Tier 1 capital (a) (b) (c) 2,500,697     $2,452,242     $2,813,503     $2,783,147     $2,751,933     2 %   (9) %  
Total capital (a) (d) $2,912,794     $2,912,595     $3,148,336     $3,121,359     $3,092,212     *     (6) %  
                                           
Risk-weighted assets (“RWA”) (a) $20,875,200     $20,692,930     $19,452,656     $19,238,109     $19,400,096     1 %   8 %  
Average assets for leverage (a) (c) $25,350,017     $25,570,905     $24,625,820     $23,748,667     $23,579,425     (1) %   8 %  
                                           
Common equity tier 1 ratio (a) (c) 10.41 %   10.31 %   N/A     N/A     N/A                
Tier 1 ratio (a) (c) 11.98 %   11.85 %   14.46 %   14.47 %   14.19 %              
Total capital ratio (a) 13.95 %   14.08 %   16.18 %   16.22 %   15.94 %              
Leverage ratio (a) (c) 9.86 %   9.59 %   11.43 %   11.72 %   11.67 %              
                                           
Tier 1 common to risk-weighted assets (c) (e) N/A     N/A     11.43 %   11.40 %   11.14 %              
Total equity to total assets 9.98 %   9.72 %   10.06 %   10.89 %   10.80 %              
Tangible common equity/tangible assets (“TCE/TA”) (e) 7.80 %   7.57 %   7.90 %   8.65 %   8.57 %              
Period-end shares outstanding (f) 234,021     233,499     234,220     235,249     237,147     *     (1) %  
Cash dividends declared per common share $0.06     $0.06     $0.05     $0.05     $0.05     *     20 %  
Book value per common share $9.09     $9.03     $9.35     $9.44     $9.38                
Tangible book value per common share (e) $8.35     $8.28     $8.60     $8.76     $8.70                
Market capitalization (millions) $3,667.1     $3,336.7     $3,180.7     $2,888.9     $2,812.6                

Certain previously reported amounts have been reclassified to agree with current presentation.
NM - Not Meaningful
* Amount is less than one percent.
(a) Current quarter is an estimate. 2Q15 and 1Q15 reflect revisions to regulatory capital definitions under the Basel III risk-based capital rules as phased-in.
(b) 2Q15 and 1Q15 include $50 million of Tier 1 qualifying trust preferred securities. All periods in 2014 include $200 million of Tier 1 qualifying trust preferred securities.
(c) See Glossary of Terms for definition of ratio.
(d) 2Q15 and 1Q15 include $150 million of Tier 2 qualifying trust preferred which are excluded from Tier 1 under Basel III.
(e) Refer to the Non-GAAP to GAAP reconciliation on page 22 of this financial supplement.
(f) In periods prior to 2Q15, decreases primarily relate to shares purchased under share repurchase programs.
12

FHN BUSINESS SEGMENT HIGHLIGHTS

Quarterly, Unaudited

                                   
                      2Q15 Changes vs.
(Thousands) 2Q15   1Q15   4Q14   3Q14   2Q14   1Q15   2Q14    
                                   
Regional Banking                                  
Net interest income $165,908   $154,409   $157,557   $153,868   $148,675   7 %   12 %    
Noninterest income 65,989   60,204   64,331   64,155   66,227   10 %   *      
Total revenues 231,897   214,613   221,888   218,023   214,902   8 %   8 %    
Provision for loan losses 17,078   4,915   5,568   2,204   8,425   NM     NM      
Noninterest expense 144,203   135,780   137,546   135,903   132,996   6 %   8 %    
Income before income taxes 70,616   73,918   78,774   79,916   73,481   (4) %   (4) %    
Provision for income taxes 24,996   26,381   28,057   28,561   26,070   (5) %   (4) %    
Net income $45,620   $47,537   $50,717   $51,355   $47,411   (4) %   (4) %    
                                   
Fixed Income                                  
Net interest income $4,297   $4,323   $3,675   $2,950   $2,587   (1) %   66 %    
Noninterest income 56,001   61,565   48,506   49,896   47,564   (9) %   18 %    
Total revenues 60,298   65,888   52,181   52,846   50,151   (8) %   20 %    
Noninterest expense (a) 51,214   54,683   46,218   47,915   116   (6) %   NM      
Income before income taxes 9,084   11,205   5,963   4,931   50,035   (19) %   (82) %    
Provision for income taxes 3,171   4,167   2,059   1,696   19,143   (24) %   (83) %    
Net income $5,913   $7,038   $3,904   $3,235   $30,892   (16) %   (81) %    
                                   
Corporate                                  
Net interest income/(expense) $(17,376)   $(16,084)   $(18,038)   $(14,246)   $(11,968)   (8) %   (45) %    
Noninterest income 3,901   5,385   4,400   4,139   5,215   (28) %   (25) %    
Total revenues (13,475)   (10,699)   (13,638)   (10,107)   (6,753)   (26) %   NM      
Noninterest expense 13,770   14,169   14,017   16,511   13,532   (3) %   2 %    
Loss before income taxes (27,245)   (24,868)   (27,655)   (26,618)   (20,285)   (10) %   (34) %    
Benefit for income taxes (15,882)   (11,640)   (19,601)   (16,928)   (16,369)   (36) %   3 %    
Net loss $(11,363)   $(13,228)   $(8,054)   $(9,690)   $(3,916)   14 %   NM      
                                   
Non-Strategic                                  
Net interest income $13,811   $14,218   $15,856   $16,969   $17,474   (3) %   (21) %    
Noninterest income (b) 4,410   2,535   2,361   39,625   7,895   74 %   (44) %    
Total revenues 18,221   16,753   18,217   56,594   25,369   9 %   (28) %    
Provision/(provision credit) for loan losses (15,078)   85   432   3,796   (3,425)   NM     NM      
Noninterest expense (c) 9,207   171,589   9,528   43,687   16,518   (95) %   (44) %    
Income/(loss) before income taxes 24,092   (154,921)   8,257   9,111   12,276   NM     96 %    
Provision/(benefit) for income taxes 9,305   (41,169)   3,184   3,513   4,734   NM     97 %    
Net income/(loss) $14,787   $(113,752)   $5,073   $5,598   $7,542   NM     96 %    
                                   
Total Consolidated                                  
Net interest income $166,640   $156,866   $159,050   $159,541   $156,768   6 %   6 %    
Noninterest income 130,301   129,689   119,598   157,815   126,901   *     3 %    
Total revenues 296,941   286,555   278,648   317,356   283,669   4 %   5 %    
Provision for loan losses 2,000   5,000   6,000   6,000   5,000   (60) %   (60) %    
Noninterest expense 218,394   376,221   207,309   244,016   163,162   (42) %   34 %    
Income/(loss) before income taxes 76,547   (94,666)   65,339   67,340   115,507   NM     (34) %    
Provision/(benefit) for income taxes 21,590   (22,261)   13,699   16,842   33,578   NM     (36) %    
Net income/(loss) $54,957   $(72,405)   $51,640   $50,498   $81,929   NM     (33) %    
NM - Not meaningful
* Amount is less than one percent.
(a) 2Q14 includes $47.1 million related to agreements with insurance companies for the recovery of expenses FHN incurred in connection with the Sentinel litigation matter which was settled in 2011.
(b) 3Q14 includes $39.7 million of gains on the sales of HFS mortgage loans.
(c) 1Q15 includes $162.5 million of loss accruals related to the settlement of potential claims related to FHN’s underwriting and origination of FHA-insured mortgage loans; 3Q14 includes $50.0 million of loss accruals related to legal matters, partially offset by $15.0 million of expense reversals related to agreements with insurance companies for the recovery of expenses FHN incurred related to litigation losses in previous periods.
13

FHN REGIONAL BANKING

Quarterly, Unaudited

                                           
                                2Q15 Changes vs. 
  2Q15     1Q15     4Q14     3Q14     2Q14     1Q15   2Q14   
                                           
Income Statement (thousands)                                          
Net interest income $165,908     $154,409     $157,557     $153,868     $148,675     7 %   12 %  
Provision for loan losses 17,078     4,915     5,568     2,204     8,425     NM     NM    
Noninterest income:                                          
NSF / Overdraft fees (a) 10,664     9,144     11,619     11,425     10,636     17 %   *    
Cash management fees 8,884     8,878     8,719     8,522     8,537     *     4 %  
Debit card income 3,327     3,064     3,117     2,945     2,934     9 %   13 %  
Other 4,538     4,537     4,655     4,705     4,850     *     (6) %  
Total deposit transactions and cash management 27,413     25,623     28,110     27,597     26,957     7 %   2 %  
Brokerage, management fees and commissions 12,456     11,399     11,647     12,333     12,844     9 %   (3) %  
Trust services and investment management 7,432     6,713     6,960     6,794     7,325     11 %   1 %  
Bankcard income (b) 5,562     4,915     5,469     5,224     7,648     13 %   (27) %  
Other service charges 2,637     2,422     2,395     2,630     2,628     9 %   *    
Miscellaneous revenue 10,489     9,132     9,750     9,577     8,825     15 %   19 %  
Total noninterest income 65,989     60,204     64,331     64,155     66,227     10 %   *    
Noninterest expense:                                          
Employee compensation, incentives, and benefits 49,692     48,272     46,175     46,259     46,055     3 %   8 %  
Other 94,511     87,508     91,371     89,644     86,941     8 %   9 %  
Total noninterest expense 144,203     135,780     137,546     135,903     132,996     6 %   8 %  
Income before income taxes $70,616     $73,918     $78,774     $79,916     $73,481     (4) %   (4) %  
PPNR (c) 87,694     78,833     84,342     82,120     81,906     11 %   7 %  
Efficiency ratio (d) 62.18 %   63.27 %   61.99 %   62.33 %   61.89 %              
                                           
Balance Sheet (millions)                                          
Average loans $14,326     $13,513     $13,129     $12,886     $12,372     6 %   16 %  
Average other earning assets 55     48     52     63     57     15 %   (4) %  
Total average earning assets 14,381     13,561     13,181     12,949     12,429     6 %   16 %  
Average core deposits 16,752     16,263     15,335     14,639     14,808     3 %   13 %  
Average other deposits 406     423     452     464     513     (4) %   (21) %  
Total average deposits 17,158     16,686     15,787     15,103     15,321     3 %   12 %  
Total period-end deposits 17,226     17,240     16,373     15,119     15,418     *     12 %  
Total period-end assets 15,264     14,894     14,350     13,695     13,700     2 %   11 %  
Net interest margin (e) 4.69 %   4.68 %   4.78 %   4.74 %   4.82 %              
Net interest spread 3.35     3.37     3.36     3.41     3.46                
Loan yield 3.48     3.51     3.50     3.56     3.63                
Deposit average yield 0.13     0.14     0.14     0.15     0.17                
                                           
Key Statistics                                          
Financial center locations (f) 175     178     178     172     172     (2) %   2 %  
NM - Not meaningful
* Amount is less than one percent.
(a) 1Q15 levels primarily attributable to seasonality in NSF fees.
(b) 2Q14 includes $2.8 million of Visa volume incentives.
(c) 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.
(d) Noninterest expense divided by total revenue.
(e) 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.
(f) 4Q14 increase related to the acquisition of bank branches.
14

FHN FIXED INCOME

Quarterly, Unaudited

                                           
                                2Q15 Changes vs. 
  2Q15     1Q15     4Q14     3Q14     2Q14     1Q15   2Q14   
                                           
Income Statement (thousands)                                          
Net interest income $4,297     $4,323     $3,675     $2,950     $2,587     (1) %   66 %  
Noninterest income:                                          
Fixed income product revenue 46,685     53,510     39,030     41,216     40,457     (13) %   15 %  
Other 9,316     8,055     9,476     8,680     7,107     16 %   31 %  
Total noninterest income 56,001     61,565     48,506     49,896     47,564     (9) %   18 %  
Noninterest expense (a) 51,214     54,683     46,218     47,915     116     (6) %   NM    
Income before income taxes $9,084     $11,205     $5,963     $4,931     $50,035     (19) %   (82) %  
                                           
Efficiency ratio (b) 84.93 %   82.99 %   88.57 %   90.67 %   NM                
Fixed income product average daily revenue $729     $877     $630     $644     $642     (17) %   14 %  
                                           
Balance Sheet (millions)                                          
Average trading inventory $1,358     $1,366     $1,177     $1,054     $1,112     (1) %   22 %  
Average other earning assets 761     781     677     648     668     (3) %   14 %  
Total average earning assets 2,119     2,147     1,854     1,702     1,780     (1) %   19 %  
Total period-end assets 2,273     2,808     2,138     2,338     2,197     (19) %   3 %  
Net interest margin (c) 0.87 %   0.83 %   0.85 %   0.75 %   0.61 %              
NM - Not meaningful
(a) 2Q14 includes $47.1 million related to agreements with insurance companies for the recovery of expenses FHN incurred in connection with the Sentinel litigation matter which was settled in 2011.
(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

                                           
                                2Q15 Changes vs. 
  2Q15     1Q15     4Q14     3Q14     2Q14     1Q15   2Q14   
                                           
Income Statement (thousands)                                          
Net interest income/(expense) $(17,376)     $(16,084)     $(18,038)     $(14,246)     $(11,968)     (8) %   (45) %  
Noninterest income excluding securities gains/(losses) 3,893     5,109     4,400     4,005     5,139     (24) %   (24) %  
Securities gains/(losses), net 8     276     -     134     76     (97) %   (89) %  
Noninterest expense 13,770     14,169     14,017     16,511     13,532     (3) %   2 %  
Loss before income taxes $(27,245)     $(24,868)     $(27,655)     $(26,618)     $(20,285)     (10) %   (34) %  
                                           
Average Balance Sheet (millions)                                          
Average loans $128     $138     $148     $153     $159     (7) %   (19) %  
Total earning assets $4,282     $5,162     $4,703     $3,999     $4,082     (17) %   5 %  
Net interest margin (a) (1.63) %   (1.28) %   (1.40) %   (1.25) %   (1.04) %              
(a) 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.
15

FHN NON-STRATEGIC

Quarterly, Unaudited

                               
                      2Q15 Changes vs.
  2Q15   1Q15   4Q14   3Q14   2Q14   1Q15   2Q14
                               
Income Statement (thousands)                              
Net interest income $13,811   $14,218   $15,856   $16,969   $17,474   (3) %   (21) %
Noninterest income:                              
Mortgage warehouse valuation (a) 270   1,228   1,240   41,287   8,213   (78) %   (97) %
Miscellaneous revenue (b) 4,140   1,307   1,121   (667)   1,682   NM     NM  
Total noninterest income excluding securities gains/(losses) 4,410   2,535   2,361   40,620   9,895   74 %   (55) %
Securities gains/(losses), net -   -   -   (995)   (2,000)   NM     NM  
Noninterest expense:                              
Repurchase and foreclosure provision (c) -   -   -   (4,300)   -   NM     NM  
Other expenses (d) 9,207   171,589   9,528   47,987   16,518   (95) %   (44) %
Total noninterest expense 9,207   171,589   9,528   43,687   16,518   (95) %   (44) %
Provision/(provision credit) for loan losses (15,078)   85   432   3,796   (3,425)   NM     NM  
Income/(loss) before income taxes $24,092   $(154,921)   $8,257   $9,111   $12,276   NM     96 %
                               
Average Balance Sheet (millions)                              
Loans $2,337   $2,472   $2,592   $2,724   $2,851   (5) %   (18) %
Loans held-for-sale (e) 115   120   125   298   335   (4) %   (66) %
Trading securities 5   5   6   6   7   *     (29) %
Allowance for loan losses (99)   (105)   (110)   (111)   (117)   (6) %   (15) %
Other assets 51   63   72   78   102   (19) %   (50) %
Total assets 2,409   2,555   2,685   2,995   3,178   (6) %   (24) %
Net interest margin (f) 2.25 % 2.19 % 2.32 % 2.23 % 2.18 %          
Efficiency ratio (g) 50.53 % NM   52.30 % 75.86 % 60.35 %          
                               
Mortgage Warehouse - Period-end (millions)                            
Ending warehouse balance (loans held-for-sale) (e) $106   $108   $115   $120   $330   (2) %   (68) %
Key Servicing Metric                              
Ending servicing portfolio (millions) (h) $922   $966   $1,013   $1,090   $1,456   (5) %   (37) %
NM - Not meaningful
* Amount is less than one percent.
(a) 3Q14 includes $39.7 million of gains on the sale of HFS mortgage loans; 2Q14 fair value adjustments reflect new information on market pricing for similar assets primarily related to the non-performing portion of the held-for-sale portfolio.
(b) 2Q15 includes a $2.7 million pre-tax gain on sale of property.
(c) 3Q14 expense reversal associated with the settlement of certain repurchase claims.
(d) 1Q15 includes $162.5 million of loss accruals related to the settlement of potential claims related to FHN’s underwriting and origination of FHA-insured mortgage loans; 3Q14 includes $50.0 million of loss accruals related to legal matters, partially offset by $15.0 million of expense reversals associated with agreements with insurance companies for the recovery of expenses FHN incurred related to litigation losses in previous periods.
(e) 4Q14 and 3Q14 decreases relate to the sale of mortgage loans HFS late in third quarter.
(f) 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.
(g) Noninterest expense divided by total revenue excluding securities gains/(losses).
(h) Includes mortgage loans serviced from FHN’s legacy mortgage banking business, legacy equity lending serviced for others, and mortgage loans in portfolio and warehouse.
16

FHN ASSET QUALITY: CONSOLIDATED

Quarterly, Unaudited

                                           
                                2Q15 Changes vs.
(Thousands) 2Q15     1Q15     4Q14     3Q14     2Q14     1Q15   2Q14  
                                           
Allowance for Loan Losses Walk-Forward                                      
Beginning reserve $228,328     $232,448     $238,641     $243,628     $247,246     (2) %   (8) %  
Provision 2,000     5,000     6,000     6,000     5,000     (60) %   (60) %  
Charge-offs (19,434)     (17,999)     (23,306)     (23,684)     (18,764)     8 %   4 %  
Recoveries 10,457     8,879     11,113     12,697     10,146     18 %   3 %  
Ending balance $221,351     $228,328     $232,448     $238,641     $243,628     (3) %   (9) %  
Reserve for unfunded commitments 5,561     4,135     4,770     2,313     2,209     34 %   NM    
Total allowance for loan losses plus reserve for unfunded commitments $226,912     $232,463     $237,218     $240,954     $245,837     (2) %   (8) %  
                                           
Allowance for Loan Losses                                          
Regional Banking $132,741     $125,982     $126,812     $127,873     $131,801     5 %   1 %  
Non-Strategic 88,610     102,346     105,636     110,768     111,827     (13) %   (21) %  
Corporate (a) NM     NM     NM     NM     NM     NM     NM    
Total allowance for loan losses $221,351     $228,328     $232,448     $238,641     $243,628     (3) %   (9) %  
                                           
Nonperforming Assets                                          
Regional Banking                                          
Nonperforming loans $69,094     $63,620     $64,654     $70,805     $89,191     9 %   (23) %  
Foreclosed real estate (b) 19,230     19,704     20,451     25,404     26,598     (2) %   (28) %  
Total Regional Banking $88,324     $83,324     $85,105     $96,209     $115,789     6 %   (24) %  
Non-Strategic                                          
Nonperforming loans $130,894     $133,804     $135,740     $139,038     $138,789     (2) %   (6) %  
Nonperforming loans held-for-sale after fair value adjustments (c) 6,372     6,888     7,643     7,931     69,184     (7) %   (91) %  
Foreclosed real estate (b) 9,879     9,977     9,979     9,857     12,183     (1) %   (19) %  
Total Non-Strategic $147,145     $150,669     $153,362     $156,826     $220,156     (2) %   (33) %  
Corporate                                          
Nonperforming loans $3,079     $2,805     $3,045     $3,903     $3,636     10 %   (15) %  
Total nonperforming assets $238,548     $236,798     $241,512     $256,938     $339,581     1 %   (30) %  
                                           
Net Charge-Offs                                          
Regional Banking $10,318     $5,745     $6,629     $6,132     $4,858     80 %   NM    
Non-Strategic (1,341)     3,375     5,564     4,855     3,760     NM     NM    
Total net charge-offs $8,977     $9,120     $12,193     $10,987     $8,618     (2) %   4 %  
                                           
Consolidated Key Ratios (d)                                          
NPL % 1.20 %   1.20 %   1.25 %   1.35 %   1.47 %              
NPA % 1.37     1.37     1.44     1.57     1.71                
Net charge-offs % 0.21     0.23     0.30     0.28     0.22                
Allowance / loans 1.31     1.36     1.43     1.51     1.54                
Allowance / NPL 1.09 x   1.14 x   1.14 x   1.12 x   1.05 x              
Allowance / NPA 0.95 x   0.99 x   0.99 x   0.96 x   0.90 x              
Allowance / net charge-offs 6.15 x   6.17 x   4.81 x   5.47 x   7.05 x              
                                           
Other                                          
Loans past due 90 days or more (e) $39,077     $46,889     $50,699     $57,786     $68,369     (17) %   (43) %  
Guaranteed portion (e) 16,221     18,552     24,036     27,020     32,782     (13) %   (51) %  
Foreclosed real estate from government insured loans 11,159     10,096     9,492     12,735     18,771     11 %   (41) %  
Period-end loans, net of unearned income (millions) 16,937     16,732     16,230     15,812     15,796     1 %   7 %  
NM - Not meaningful
* Amount is less than one percent.
(a) The valuation adjustment taken upon exercise of clean-up calls included expected losses.
(b) Excludes foreclosed real estate from government-insured mortgages.
(c) 3Q14 decrease is related to the sale of held-for-sale mortgage loans.
(d) See Glossary of Terms for definitions of Consolidated Key Ratios.
(e) Includes loans held-for-sale.
17

FHN ASSET QUALITY: CONSOLIDATED

Quarterly, Unaudited

                                       
                              2Q15 Changes vs.
  2Q15     1Q15     4Q14     3Q14     2Q14   1Q15   2Q14
                                       
Key Portfolio Details                                      
C&I                                
Period-end loans ($ millions) $9,833     $9,638     $9,007     $8,477     $8,403   2 %   17 %
30+ Delinq. % (a) 0.08 %   0.07 %   0.05 %   0.10 %   0.19 %          
NPL % 0.44     0.35     0.36     0.49     0.58            
Charge-offs % (qtr. annualized) 0.17     0.07     0.19     NM     0.20            
Allowance / loans % 0.80 %   0.70 %   0.74 %   0.82 %   0.82 %          
Allowance / charge-offs 4.85 x   10.41 x   4.05 x   NM     4.35 x          
                                       
Commercial Real Estate                                      
Period-end loans ($ millions) $1,401     $1,321     $1,278     $1,278     $1,232   6 %   14 %
30+ Delinq. % (a) 0.23 %   0.33 %   0.14 %   0.33 %   1.10 %          
NPL % 0.84     1.01     1.20     1.11     1.14            
Charge-offs % (qtr. annualized) 0.22     0.03     NM     0.47     NM            
Allowance / loans % 1.53 %   1.34 %   1.45 %   1.21 %   1.28 %          
Allowance / charge-offs 7.29 x   45.37 x   NM     2.64 x   NM            
                                       
Consumer Real Estate                                      
Period-end loans ($ millions) $4,870     $4,923     $5,048     $5,131     $5,219   (1) %   (7) %
30+ Delinq. % (a) 0.94 %   0.98 %   1.10 %   1.04 %   0.93 %          
NPL % 2.35     2.43     2.39     2.41     2.51            
Charge-offs % (qtr. annualized) NM     0.31     0.38     0.60     0.20            
Allowance / loans % 1.75 %   2.22 %   2.24 %   2.31 %   2.26 %          
Allowance / charge-offs NM     7.06 x   5.85 x   3.83 x   11.30 x          
                                       
Permanent Mortgage                                      
Period-end loans ($ millions) $488     $512     $539     $573     $594   (5) %   (18) %
30+ Delinq. % (a) 2.26 %   2.76 %   1.72 %   2.73 %   1.71 %          
NPL % 6.66     6.43     6.32     5.93     6.23            
Charge-offs % (qtr. annualized) 0.11     0.44     1.00     0.25     0.12            
Allowance / loans % 4.59 %   3.94 %   3.55 %   3.53 %   3.99 %          
Allowance / charge-offs 40.53 x   8.79 x   3.46 x   14.17 x   31.85 x          
                                       
Credit Card and Other                                      
Period-end loans ($ millions) $346     $338     $358     $353     $348   2 %   (1) %
30+ Delinq. % (a) 1.09 %   1.20 %   1.42 %   1.44 %   1.39 %          
NPL % 0.22     0.22     0.21     0.20     0.39            
Charge-offs % (qtr. annualized) 5.73     3.51     3.33     3.19     3.35            
Allowance / loans % 3.84 %   4.01 %   4.11 %   4.17 %   5.01 %          
Allowance / charge-offs 0.66 x   1.10 x   1.24 x   1.31 x   1.51 x          
NM - Not meaningful
Certain previously reported amounts have been reclassified to agree with current presentation.
(a) 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
18

FHN ASSET QUALITY: REGIONAL BANKING

Quarterly, Unaudited

                                           
                                2Q15 Changes vs. 
  2Q15     1Q15     4Q14     3Q14     2Q14     1Q15   2Q14   
                                           
Total Regional Banking                                    
Period-end loans ($ millions) $14,556     $14,200     $13,568     $13,002     $12,853     3 %   13 %  
30+ Delinq. % (a)  0.21 %    0.24 %    0.22 %    0.29 %    0.43 %              
NPL %  0.47      0.45      0.48      0.54      0.69                
Charge-offs % (qtr. annualized)  0.29      0.17      0.20      0.19      0.16                
Allowance / loans %  0.91 %    0.89 %    0.93 %    0.98 %    1.03 %              
Allowance / charge-offs  3.21 x    5.41 x    4.82 x    5.26 x    6.76 x              
                                           
Key Portfolio Details                                          
C&I                                          
Period-end loans ($ millions) $9,398     $9,185     $8,553     $8,022     $7,947     2 %   18 %  
30+ Delinq. % (a)  0.08 %    0.07 %    0.05 %    0.09 %    0.20 %              
NPL %  0.32      0.24      0.24      0.37      0.57                
Charge-offs % (qtr. annualized)  0.18      0.08      0.21     NM      0.09                
Allowance / loans %  0.78 %    0.68 %    0.72 %    0.81 %    0.84 %              
Allowance / charge-offs  4.48 x    9.42 x    3.62 x   NM      10.12 x              
                                           
Commercial Real Estate                                          
Period-end loans ($ millions) $1,400     $1,320     $1,273     $1,274     $1,226     6 %   14 %  
30+ Delinq. % (a) (b)  0.23 %    0.32 %    0.14 %    0.33 %    1.10 %              
NPL %  0.84      1.00      1.14      1.04      1.06                
Charge-offs % (qtr. annualized)  0.22      0.03     NM      0.49     NM                
Allowance / loans %  1.53 %    1.33 %    1.43 %    1.18 %    1.25 %              
Allowance / charge-offs  7.22 x    52.33 x   NM      2.46 x   NM                
                                           
Consumer Real Estate                                          
Period-end loans ($ millions) $3,413     $3,358     $3,385     $3,356     $3,334     2 %   2 %  
30+ Delinq. % (a)  0.47 %    0.55 %    0.57 %    0.61 %    0.64 %              
NPL %  0.78      0.84      0.86      0.83      0.90                
Charge-offs % (qtr. annualized)  0.08      0.15      0.11      0.39      0.18                
Allowance / loans %  0.73 %    0.97 %    0.95 %    0.99 %    0.97 %              
Allowance / charge-offs  9.73 x    6.45 x    8.55 x    2.55 x    5.32 x              
                                           
Credit Card, Permanent Mortgage, and Other                                          
Period-end loans ($ millions) $345     $337     $357     $351     $346     2 %   *    
30+ Delinq. % (a)  1.18 %    1.29 %    1.51 %    1.49 %    1.43 %              
NPL %  0.14      0.15      0.14      0.15      0.14                
Charge-offs % (qtr. annualized)(c)  5.57      3.22      3.00      3.01      3.05                
Allowance / loans %  3.72 %    3.88 %    4.06 %    4.07 %    4.98 %              
Allowance / charge-offs  0.66 x    1.16 x    1.36 x    1.36 x    1.64 x              
                                           
ASSET QUALITY: CORPORATE                                          
                                           
Permanent Mortgage                                          
Period-end loans ($ millions) $113     $123     $136     $147     $155     (8) %   (27) %  
30+ Delinq. % (a)  2.51 %    3.41 %    2.32 %    2.24 %    1.91 %              
NPL %  2.72      2.29      2.25      2.65      2.34                
Charge-offs % (qtr. annualized) NM     NM     NM     NM     NM                
Allowance / loans % NM     NM     NM     NM     NM                
Allowance / charge-offs NM     NM     NM     NM     NM                
NM - Not meaningful
(a) 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
(b) 1Q15 increase was primarily driven by one relationship.
(c) 2Q15 increase was primarily driven by charge-offs in a sub segment of the credit card portfolio which had previously been reserved for.
19

FHN ASSET QUALITY: NON-STRATEGIC

Quarterly, Unaudited

                                           
                                2Q15 Changes vs.
  2Q15     1Q15     4Q14     3Q14     2Q14     1Q15   2Q14  
                                           
Total Non-Strategic                                    
Period-end loans ($ millions) $2,268     $2,409     $2,527     $2,663     $2,788     (6) %   (19) %  
30+ Delinq. % (a) 1.67 %   1.67 %   1.67 %   1.73 %   1.24 %              
NPL % (b) 5.77     5.55     5.37     5.22     4.98                
Charge-offs % (qtr. annualized) NM     0.55     0.85     0.71     0.53                
Allowance / loans % 3.91 %   4.25 %   4.18 %   4.16 %   4.01 %              
Allowance / charge-offs NM     7.48 x   4.79 x   5.75 x   7.41 x              
                                           
Key Portfolio Details                                          
C&I                                          
Period-end loans ($ millions) $434     $453     $454     $456     $456     (4) %   (5) %  
30+ Delinq. % (a) 0.02 %   0.08 %   0.05 %   0.23 %   0.02 %              
NPL % (b) 3.07     2.68     2.64     2.64     0.58                
Charge-offs % (qtr. annualized) NM     NM     NM     NM     1.99                
Allowance / loans % 1.23 %   1.09 %   1.10 %   1.01 %   0.38 %              
Allowance / charge-offs NM     NM     NM     NM     0.19 x              
                                           
Commercial Real Estate                                          
Period-end loans ($ millions) $-     $1     $5     $5     $5     (100) %   (100) %  
30+ Delinq. % (a) - %   14.87 %   - %   - %   - %              
NPL % -     18.31     17.47     20.01     19.34                
Charge-offs % (qtr. annualized) NM     2.64     6.91     NM     NM                
Allowance / loans % 7.36 %   8.22 %   9.25 %   9.36 %   9.41 %              
Allowance / charge-offs NM     1.06 x   1.27 x   NM     NM                
                                           
                                           
Consumer Real Estate                                          
Period-end loans ($ millions) $1,458     $1,565     $1,663     $1,775     $1,885     (7) %   (23) %  
30+ Delinq. % (a) 2.06 %   1.92 %   2.17 %   1.84 %   1.45 %              
NPL %   6.03       5.83       5.51     5.40       5.35                
Charge-offs % (qtr. annualized) NM       0.64     0.91     0.98     0.23                
Allowance / loans % 4.14 %   4.90 %   4.86 %   4.79 %   4.54 %              
Allowance / charge-offs NM     7.36 x   5.19 x   4.76 x   19.65 x              
                                           
Permanent Mortgage                                          
Period-end loans ($ millions) $365     $379     $393     $415     $427     (4) %   (15) %  
30+ Delinq. % (a) 2.12 %   2.50 %   1.40 %   2.88 %   1.59 %              
NPL % 7.92     7.82     7.78     7.13     7.71                
Charge-offs % (qtr. annualized) 0.14     0.59     1.44     0.29     0.15                
Allowance / loans % 6.11 %   5.32 %   4.83 %   4.84 %   5.52 %              
Allowance / charge-offs 44.22 x   8.82 x   3.30 x   16.57 x   35.18 x              
                                           
Other Consumer                                          
Period-end loans ($ millions) $11     $11     $12     $12     $15       *   (27) %  
30+ Delinq. % (a) 1.31 %   1.40 %   2.48 %   2.24 %   1.79 %              
NPL % 6.86     6.66     6.22     5.38     9.16                
Charge-offs % (qtr. annualized) 5.97     9.24     8.21     6.74     7.81                
Allowance / loans % 4.95 %   4.69 %   3.43 %   4.48 %   2.94 %              
Allowance / charge-offs 0.81 x   0.49 x   0.41 x   0.63 x   0.36 x              
NM - Not meaningful
* Amount is less than one percent.
(a) 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
(b) 3Q14 increase related to interest deferral elected by an insurance TRUPS.
   
20

FHN: PORTFOLIO METRICS

Unaudited

             
             
C&I Portfolio: $9.8 Billion (58.1% of Total Loans) as of June 30, 2015            
        % OS  
General Corporate, Commercial, and Business Banking Loans         78%  
Loans to Mortgage Companies         17%  
Trust Preferred Loans         4%  
Bank Holding Company Loans         1%  

 

Consumer Real Estate (primarily Home Equity) Portfolio: $4.9 Billion (28.8% of Total Loans)

 

Origination LTV and FICO for Portfolio as of June 30, 2015 Loan-to-Value  
(excludes whole loan insurance) <=60% >60% - <=80% >80% - 90%   >90%  
FICO score greater than or equal to 740 11%   23%   17%   10%  
FICO score 720-739 1%   4%   4%   3%  
FICO score 700-719 1%   4%   4%   2%  
FICO score 660-699 1%   4%   3%   3%  
FICO score 620-659 1%   1%   1%   1%  
FICO score less than 620   -%   -%     -%   1%  

 

Origination LTV and FICO for Portfolio - Regional Bank as of June 30, 2015 Loan-to-Value  
(excludes whole loan insurance) <=60% >60% - <=80% >80% - 90%   >90%  
FICO score greater than or equal to 740 12%   24%   18%   12%  
FICO score 720-739 1%   4%   4%   3%  
FICO score 700-719 1%   3%   3%   2%  
FICO score 660-699 1%   3%   3%   2%  
FICO score 620-659 1%   1%   1%   0%  
FICO score less than 620   -%   -%     -%   1%  

 

Origination LTV and FICO for Portfolio - Non-Strategic as of June 30, 2015 Loan-to-Value  
(excludes whole loan insurance) <=60% >60% - <=80% >80% - 90%   >90%  
FICO score greater than or equal to 740 8%   21%   15%   5%  
FICO score 720-739 2%   6%   6%   2%  
FICO score 700-719 2%   5%   6%   2%  
FICO score 660-699 2%   5%   4%   4%  
FICO score 620-659   -%   1%   1%   1%  
FICO score less than 620   -%     -%     -%   2%  

 

Consumer Real Estate Portfolio Detail:            
      Origination Characteristics  
Vintage Balances ($B)   W/A Age (mo.)   CLTV   FICO % TN   % 1st lien  
pre-2003 $0.1   161   78%   702 41%   30%  
2003 $0.1   144   77%   718 30%   36%  
2004 $0.3   131   80%   720 19%   28%  
2005 $0.5   119   81%   727 15%   15%  
2006 $0.4   108   78%   732 21%   17%  
2007 $0.5   96   81%   737 26%   19%  
2008 $0.2   85   75%   745 72%   50%  
2009 $0.1   73   72%   749 86%   57%  
2010 $0.2   59   79%   752 93%   71%  
2011 $0.3   47   77%   760 89%   86%  
2012 $0.7   36   77%   763 89%   91%  
2013 $0.6   24   78%   756 86%   85%  
2014 $0.6   12   81%   757 86%   89%  
2015 $0.3   3   80%   758 83%   91%  
Total $4.9   65   79%         746 (a) 61%   59%  
   
(a) 746 average portfolio origination FICO; 741 weighted average portfolio FICO (refreshed).
21

FHN NON-GAAP TO GAAP RECONCILIATION

Quarterly, Unaudited

                             
                             
(Dollars and shares in thousands, except per share data) 2Q15     1Q15     4Q14     3Q14     2Q14  
Tangible Common Equity (Non-GAAP)                            
(A) Total equity (GAAP) $2,517,905     $2,499,257     $2,581,590     $2,611,814     $2,615,275  
Less: Noncontrolling interest (a) 295,431     295,431     295,431     295,431     295,431  
Less: Preferred stock 95,624     95,624     95,624     95,624     95,624  
(B) Total common equity $2,126,850     $2,108,202     $2,190,535     $2,220,759     $2,224,220  
Less: Intangible assets (GAAP) (b) 172,854     174,152     175,450     160,987     161,968  
(C) Tangible common equity (Non-GAAP) $1,953,996     $1,934,050     $2,015,085     $2,059,772     $2,062,252  
                             
Tangible Assets (Non-GAAP)                            
(D) Total assets (GAAP) $25,239,767     $25,715,888     $25,668,187     $23,982,597     $24,218,345  
Less: Intangible assets (GAAP) (b) 172,854     174,152     175,450     160,987     161,968  
(E) Tangible assets (Non-GAAP) $25,066,913     $25,541,736     $25,492,737     $23,821,610     $24,056,377  
                             
Average Tangible Common Equity (Non-GAAP)                            
(F) Average total equity (GAAP) $2,511,929     $2,607,521     $2,651,729     $2,631,841     $2,558,062  
Less: Average noncontrolling interest (a) 295,431     295,431     295,431     295,431     295,431  
Less: Average preferred stock 95,624     95,624     95,624     95,624     95,624  
(G) Total average common equity $2,120,874     $2,216,466     $2,260,674     $2,240,786     $2,167,007  
Less: Average intangible assets (GAAP) (b) 173,486     174,787     165,769     161,467     162,447  
(H) Average tangible common equity (Non-GAAP) $1,947,388     $2,041,679     $2,094,905     $2,079,319     $2,004,560  
                             
Annualized Net Income/(Loss) Available to Common Shareholders                            
(I) Net income/(loss) available to common shareholders (annualized) $202,780     $(311,114)     $186,904     $182,790     $310,932  
                             
Period-end Shares Outstanding                            
(J) Period-end shares outstanding 234,021     233,499     234,220     235,249     237,147  
                             
Tier 1 Common (Non-GAAP)                            
(K) Tier 1 capital (c) (f)     (f)     $2,813,503     $2,783,147     $2,751,933  
Less: Noncontrolling interest - FTBNA  preferred stock (d) (f)     (f)     294,816     294,816     294,816  
Less: Preferred Stock (f)     (f)     95,624     95,624     95,624  
Less: Trust preferred (e) (f)     (f)     200,000     200,000     200,000  
(L) Tier 1 common (Non-GAAP) (f)     (f)     $2,223,063     $2,192,707     $2,161,493  
                             
Risk Weighted Assets                            
(M) Risk weighted assets (c) (f)     (f)     $19,452,656     $19,238,109     $19,400,096  
                             
Ratios                            
(I)/(H) Return on average tangible common equity (“ROTCE”) (Non-GAAP) 10.41 %   (15.24) %   8.92 %   8.79 %   15.51 %
(I)/(G) Return on common equity (GAAP) 9.56 %   (14.04) %   8.27 %   8.16 %   14.35 %
(C)/(E) Tangible common equity to tangible assets (“TCE/TA”) (Non-GAAP) 7.80 %   7.57 %   7.90 %   8.65 %   8.57 %
(A)/(D) Total equity to total assets (GAAP) 9.98 %   9.72 %   10.06 %   10.89 %   10.80 %
(C)/(J) Tangible book value per common share (Non-GAAP) $8.35     $8.28     $8.60     $8.76     $8.70  
(B)/(J) Book value per common share (GAAP) $9.09     $9.03     $9.35     $9.44     $9.38  
(L)/(M) Tier 1 common to risk weighted assets (Non-GAAP) (f)     (f)     11.43 %   11.40 %   11.14 %
(K)/(D) Tier 1 capital to total assets (GAAP) (f)     (f)     10.96 %   11.60 %   11.36 %
Certain previously reported amounts have been reclassified to agree with current presentation.
(a) Included in Total equity on the Consolidated Balance Sheet.
(b) Includes goodwill and other intangible assets, net of amortization.
(c) Defined by and calculated in conformity with bank regulations.
(d) Represents FTBNA preferred stock included in noncontrolling interest.
(e) Included in Term borrowings on the Consolidated Balance Sheet.
(f) In periods prior to 1Q15, these measures were used to reconcile non-GAAP to GAAP information.
22

FHN GLOSSARY OF TERMS

 

 

 

Average Assets for Leverage: The amount of assets a company uses to calculate the leverage ratio, which includes average total assets less disallowed portions of goodwill, other intangibles, and deferred tax assets, as well as certain other regulatory adjustments made to tier 1 capital.

 

Common Equity Tier 1: A measure of a company’s capital position under U.S. Basel III capital rules first applicable to FHN in 2015, which includes common equity less goodwill, other intangibles and certain other required regulatory deductions as defined in those rules. Common Equity Tier 1 capital under U.S. Basel III in 2015 is not the same as the non-regulatory Tier 1 Common capital commonly used prior to 2015; comparisons between the two are not meaningful.

 

Core Businesses: Management considers regional banking, fixed income, and corporate as FHN’s core businesses. Non-strategic has significant legacy assets and operations that are being wound down.

 

Fully Taxable Equivalent (“FTE”): Reflects the amount of tax-exempt income adjusted to a level that would yield the same after-tax income had that income been subject to taxation.

 

Tier 1 Capital Ratio: Ratio consisting of shareholders’ equity adjusted for certain unrealized gains/(losses) on available-for-sale securities, reduced by goodwill, certain other intangible assets, the disallowable portion of mortgage servicing rights and other disallowed assets divided by risk-adjusted assets. The components of Tier 1 capital, including the risk-adjustment of assets, changed significantly for FHN beginning in 2015 so that comparisons of a Tier 1 capital ratio after 2014 with a ratio prior to 2015 may not be meaningful.

 

Tier 1 Common: A measure of a company’s capital position associated with U.S. capital rules applicable to FHN prior to 2015, which includes Tier 1 capital as then defined less preferred stock amounts.

 

Troubled Debt Restructuring (“TDR”): A restructuring of debt whereby a creditor for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Such concession is granted in an attempt to protect as much of the creditor’s investment as possible by increasing the probability of repayment.

 

 

Key Ratios

 

Return on Average Assets: Ratio is annualized net income to average total assets.

 

Return on Average Common Equity: Ratio is annualized net income available to common shareholders to average common equity.

 

Return on Average Tangible Common Equity: Ratio is annualized net income available to common shareholders to average tangible common equity.

 

Fee Income to Total Revenue: Ratio is fee income excluding securities gains/(losses) to total revenue excluding securities gains/(losses).

 

Efficiency Ratio: Ratio is noninterest expense to total revenue excluding securities gains/(losses).

 

Leverage Ratio: Ratio is tier 1 capital to average assets for leverage.

 

 

Asset Quality - Consolidated Key Ratios

 

NPL %: Ratio is nonperforming loans in the loan portfolio to total period-end loans.

 

NPA %: Ratio is nonperforming assets related to the loan portfolio to total period-end loans plus foreclosed real estate and other assets.

 

Net charge-offs %: Ratio is annualized net charge-offs to total average loans.

 

Allowance / loans: Ratio is allowance for loan losses to total period-end loans.

 

Allowance / NPL: Ratio is allowance for loan losses to nonperforming loans in the loan portfolio.

 

Allowance / NPA: Ratio is allowance for loan losses to nonperforming assets related to the loan portfolio.

 

Allowance / charge-offs: Ratio is allowance for loan losses to annualized net charge-offs.

 

23

First Horizon National Corporation Second Quarter 2015 Earnings July 17, 2015

 

2 ▪ Portions of this presentation use non - GAAP financial information. Each of those portions is so noted, and a reconciliation of that non - GAAP information to comparable GAAP information is provided in a footnote or in the appendix at the end of this presentation. ▪ This presentation contains forward - looking statements, which may include guidance, involving significant risks and uncertainties which will be identified by words such as “ believe”,“expect”,“anticipate”,“intend”,“estimate ”, “ should”,“is likely”,“will”,“going forward” and other expressions that indicate future events and trends and may be followed by or reference cautionary statements. A number of factors could cause actual results to differ materially from those in the forward - looking information. These factors are outlined in our recent earnings and other press releases and in more detail in the most current 10 - Q and 10 - K. FHN 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.

 

Building Franchise Value Executing “Blue Chip” Priorities ▪ Being easy to do business with ▪ Providing differentiated customer service ▪ Using the Bonefish to drive profitability 3

 

4 Numbers may not add to total due to rounding. All Non - GAAP numbers are reconciled in the appendix. 1 ROTCE is Non - GAAP. 2 Consolidated PPNR excludes a ~$47mm insurance recovery in 2Q14. This number is Non - GAAP. Second Quarter 2015 Accomplishments 2Q14 - 2Q15 Regional Bank Loan Growth 2Q15 Average Regional Bank Commercial Loans 21% 13% 12% 11% 18% 6% 5% 3% West TN Loans to Mortgage Companies 115% ▪ Earnings per share at $0.22 ▪ ROTCE at 10.4% 1 ▪ NIM up 18 bps linked quarter; NII up 6% linked quarter and year over year ▪ Consolidated revenues up 5% year over year ▪ Consolidated 2 and Regional Bank Pre - Provision Net Revenue (PPNR) up 4% and 7% year over year ▪ Regional Bank average loan growth of 16% year over year ▪ Regional Bank average core deposits up 13% year over year ▪ Revenue per FTE in Regional Bank up 8% year over year ▪ Fixed income product average daily revenue at $729,000 vs $642,000 a year ago ▪ DFAST results disclosed in 2Q15; capital position remains strong Corporate 9% CRE 13% ABL 15% Loans to Mortgage Companies 16% Commercial 34% Healthcare 3% Correspondent 2% East TN Middle TN Mid - Atlantic Commercial PC/WM ABL CRE Markets: Lending Areas: Energy 1% Specialty Lending Areas

 

FINANCIAL RESULTS 5

 

+10% 2Q15 Consolidated Financial Results 6 Net Interest Income Fee Income Expense NIAC Excluding Litigation Charge/Insurance Recovery 1 $ in millions, except EPS Financial Results 2Q15 $167 Loan Loss Provision $130 $218 $2 $51 $0.22 2Q15 vs +6% +3% +34% - 60% - 35% - 33% 1Q15 $157 $130 $376 $5 $(77) $(0.33) 2Q14 $157 $127 $163 $5 $78 $0.33 1Q15 +6% * - 42% - 60% NM NM 2Q14 Actuals ▪ Adjusted PPNR 2 up 8% linked quarter and 4% year over year ▪ Revenue up 4% linked quarter and 5% year over year ▪ Net interest income up 6% linked quarter and year over year ▪ Total average loans up 4% linked quarter and 9% year over year ▪ Total average core deposits up 2% linked quarter and 16% year over year ▪ Loan loss provision of $2mm with NCOs of $9mm in 2Q15 vs $5mm of provision and $9mm of NCOs in 1Q15 ▪ Common Equity Tier 1 (CET1) of 10.4% 3 Net Income Available to Common Shareholders (NIAC) Expense Excluding Litigation Charge/Insurance Recovery 1 $218 EPS $51 EPS Excluding Litigation Charge/Insurance Recovery 1 $0.22 Adjusted Financial Results $47 $0.20 $214 $42 $0.18 $210 +4% +7% +2% +21% +22% Numbers may not add to total due to rounding. * Amount is less than one percent. All Non - GAAP numbers are reconciled in the appe ndix. 1 Expense , NIAC and EPS excluding litigation charge/insurance recovery are Non - GAAP numbers. 2 PPNR excludes the ~$163mm in legal matters in 1Q15 and ~$ 47mm insurance recovery in 2Q14. These are Non - GAAP numbers. 3 2Q15 Common Equity Tier 1 is an estimate.

 

2Q15 Segment Highlights 7 Drivers and Impacts Net Income 1 $ in millions, except EPS 2Q15 Per Share Impact 2 Regional Banking Fixed Income Corporate 1 Non - Strategic Total 1 1Q15 $48 $7 $(18) $(114) $(77) 2Q14 $47 $31 $(8) $8 $78 2Q15 $46 $6 $(16) $15 $51 $0.20 $0.03 $(0.07) $0.06 $0.22 ▪ Fixed income product ADR of $729k in 2Q15 vs $877k in 1Q15 ▪ Expenses down 6% linked quarter ▪ 2Q14 includes the impact of a $47mm expense reversal associated with a lawsuit from 2011 ▪ 1Q15 included $163mm expense related to legal matters ▪ 2Q15 included $2.7mm pre - tax gain on sale of property ▪ 2Q15 loan loss provision of $(15)mm vs $0.1mm in 1Q15 ▪ Average loans up 16% year over year and 6% linked quarter ▪ PPNR up 7% year over year and 11% linked quarter ▪ NII up 12% year over year and 7% linked quarter ▪ 2Q15 loan loss provision of $17mm vs $5mm in 1Q15 ▪ Impacted by lengthening of loss emergence period and loan growth Numbers may not add to total due to rounding. 1 Corporate and Consolidated show net income available to common, which reflects $3mm of noncontrolling interest and $1.6mm of pre ferred stock dividends in each quarter. 2 Segment EPS impacts are Non - GAAP numbers and reconciled in the table. EPS impacts are calculated using the 2Q15 net income colum n divided by the 235 million diluted shares outstanding.

 

Regional Banking Financial Results Solid Revenue Growth 8 Net Interest Income Fee Income Expense $ in millions Financial Results 2Q15 $166 Loan Loss Provision Pre - Provision Net Revenue $66 $144 $88 $17 2Q15 vs +12% * +8% +7% NM 1Q15 $154 $60 $136 $79 $5 2Q14 $149 $66 $133 $82 $8 1Q15 +7% +10% +6% +11% NM 2Q14 Actuals ▪ Revenues up 8% linked quarter and year over year ▪ NII up 7% linked quarter and 12% year over year ▪ Fee income up 10% linked quarter primarily due to seasonal rebound and higher activity in deposit transactions, trust and brokerage fees ▪ Average loans increased 6% linked quarter and 16% year over year ▪ Average core deposits up 3% linked quarter and up 13% year over year ▪ Loan loss provision up due to loan growth, an extension of the loss emergence period and reserve associated with single exposure ▪ Efficiency ratio improvement of 109 bps linked quarter ▪ Expenses up 6% linked quarter, primarily related to personnel incentive compensation adjustments ▪ 2Q15 net charge - offs of $10mm, or annualized 0.29% of average loans Numbers may not add to total due to rounding. * Amount is less than 1%. Net Income $46 $48 $47 - 4% - 4% Total Average Loans ($B) Total Average Deposits ($B) $14 $14 $12 +16% +6% $17 $17 $15 +12% +3%

 

$3.39B $3.42B $0.76B $0.75B $1.88B $1.96B $2.11B $2.05B $1.04B $1.61B $1.24B $1.31B $1.44B $1.47B $1.66B $1.76B 1Q15 2Q15 $0 $3 $6 $9 $12 $15 9 Profitable Growth Opportunities: Regional Banking Double Digit Loan Growth Year over Year Regional Banking Loan Growth by Lending Area 1 ▪ Regional Banking average loan growth of 16% year over year and 6% linked quarter ▪ Continued growth in specialty lending areas ▪ Asset - based lending growth driven by consumer finance and factoring ▪ Private Client/Wealth Management increase from adding RMs in growth markets ▪ Commercial real estate increases across markets in multi - family, hospitality, retail and other property types such as student housing and assisted living facilities as well as funding up of commitments ▪ Loans to mortgage companies increase includes strong purchase and refi activity +6% $15B 5% 4% 2% Loans to Mortgage Companies PC/WM CRE Regional Bank Areas of Linked Quarter Loan Growth 1 Commercial Business PC/WM Retail Loans to Mortgage Cos CRE ABL Other Specialty ABL 55% 1 Average Regional Banking loan growth from 1Q15 to 2Q15.

 

10 $0 $1 $2 $3 $0 $250 $500 $750 2008 2009 2010 2011¹ 2012 2013 2014¹ 2015² Revenue Expense Column1 ADR Fixed Income - FTN Financial Financial Results $750mm Fixed Income Product Revenue and Expense ▪ Fixed income product average daily revenue (ADR) at $729k in 2Q15 ▪ 1H15 ADR up over prior year across all products (agencies, mortgages, corporates & municipals) ▪ Largest increase over prior year was in municipals, driven in part by strategic focus on municipal product Numbers may not add to total due to rounding. 1 2011 and 2014 exclude ~$37mm of expense associated with a legal settlement and the impact of a ~$47mm insurance recovery from the ~$321mm and ~$147mm in expense reported in those periods. These are Non - GAAP numbers. 2 1H15 annualized. 3 2Q14 noninterest expense includes the impact of a ~$47mm insurance recovery. $3mm Left Axis: Right Axis: NII Fee Income $ in millions, except ADR Financial Results 2Q15 $4 Net Income $56 $6 2 Q15 vs +66% +18% - 81% 1Q15 $4 $62 $7 2 Q14 $3 $48 $31 1Q15 - 1% - 9% - 16% 2 Q14 Actuals Expense 3 $51 NM $55 $0 - 6% ADR $729k $877k $642k +14% - 17%

 

11 Net Interest Income Sensitivity Impact 1 NII and Net Interest Margin Balance Sheet Positioned to Benefit from Rising Rates +2.5% $16mm +3.8% +$25mm +6.2% +$40mm +11.3% +$73mm 0% 3% 6% 9% 12% +25bps +50bps +100bps +200bps ▪ NIM up 18 bps linked quarter to 2.92% ▪ NII up $10mm or 6% linked quarter ▪ Average core deposits up 2% linked quarter, 16% YOY ▪ Regional Banking average deposit rate paid of 13bps in 2Q15 vs 14 bps in 1Q15 ▪ Floating rate loans comprise 68% of loan portfolio vs fixed rate loans at 32% ▪ Attractive and stable low - cost funding mix in Regional Banking with 58% DDA and interest checking deposits Average Deposit Growth 12% 2Q15 $167 2.92% NII and NIM Change Drivers NII NIM ($ in millions) 1Q15 $157 2.74% Interest Bearing Cash/Fed Funds Sold Loan Fees & Cash Basis Income More Days in Quarter Commercial Loan Yields Commercial Loan Volume +7% +3% Linked Quarter: Year Over Year: Consumer Commercial Commercial Other $3.5 6bp - 2bp $6.8 3bp $1.1 - $1.1 11bp - - - $0.5 - +23% Numbers may not add to total due to rounding. 1 NII sensitivity analysis uses FHN’s balance sheet as of 2Q15. Bps impact assumes increase in Fed Funds rate. Non - Strategic is interest rate neutral, thus nearly all the sensitivity impact would be allocated to the Core Businesses. Consumer 0%

 

Improving Productivity and Efficiency ▪ Continuing wind - down of Non - Strategic segment ▪ Legal expenses down 27% in 1H15 vs 1H14 ▪ Streamlining end - to - end processes ▪ Committed savings of ~$4mm from IT and loan operations by end of 2015 ▪ Reducing corporate real estate footprint ▪ Decreased square footage per FTE by 24% from 2014 to 2015 ▪ Sold non - strategic property for $2.7mm gain in 2Q15 ▪ Right - sizing branch network as consumer usage shifts to FHN’s expanded digital banking platforms ▪ Reduced financial centers by 3 branches from 1Q15 to 2Q15 Investing in Future Growth Executing Efficiency Opportunities ▪ Continuing investments in growth markets such as Mid - Atlantic, Nashville, Houston ▪ Build out of Houston market includes 5 strategic hires over the last year ▪ Investing in technology and digital platforms ▪ Compensation plan enhancements in revenue producing areas 12

 

13 Non - Performing Assets $0 $100 $200 $300 $400 2Q14 3Q14 4Q14 1Q15 2Q15 NPLs NPLs Held for Sale ORE $400mm Net Charge - Offs Asset Quality Trends Stable to Improving Credit Trends Reserves 1.00% 1.25% 1.50% 1.75% 2.00% $200 $220 $240 $260 2Q14 3Q14 4Q14 1Q15 2Q15 Reserves $ Reserves / Loans % $260mm 0.00% 0.13% 0.25% 0.38% 0.50% $0 $5 $10 $15 2Q14 3Q14 4Q14 1Q15 2Q15 NCOs $ Provision $ NCO %¹ $15mm ▪ Net charge - offs of $9mm in 2Q15, steady with 1Q15 and 2Q14 ▪ Annualized net charge - off ratio improvement of 2 bps to 0.21% from 1Q15 ▪ NPL levels at $209mm, down 30% year over year ▪ Commercial NPLs down 11% year over year ▪ Non - strategic loans declined 5% linked quarter, down 18% year over year Numbers may not add to total due to rounding. 1 Net charge - off % is annualized.

 

14 2Q15 Consolidated Long - Term Targets ROTCE 1 10.4% 15.0 – 20.0% ROA 1 0.87% 1.25 - 1.45% NIM 1 2.92% 3.50 - 4.00% CET1 10.4% 8.0 – 9.0% NCO / Average Loans 1 0.21% 0.30 - 0.70% Fee Income / Revenue 44% 40 - 50% Efficiency Ratio 74% 60 - 65% 1 ROTCE, ROA, NIM, and NCO / Average Loans are annualized. ROTCE is a Non - GAAP number and reconciled in the appendix. Building Long - Term Earnings Power: Bonefish Targets Focused on Growing Our Company Selectively and Profitably While Positioning Our Balance Sheet for Sustainable, Higher Returns in the Long Term Annualized Net Charge-Offs 0.30% - 0.70% % Fee Income 40% - 50% Efficiency Ratio 60% - 65% Return on Tangible Common Equity 15% - 20% Equity / Assets Risk Adjusted Margin Total Assets Earning Assets Pre-tax Income Tax Rate Common Equity Tier 1 8% - 9% Return on Assets 1.25% - 1.45% Net Interest Margin 3.50% - 4.00%

 

15 Closing the Gap to Bonefish Targets Building a Foundation for Long - Term Earnings Power Current ROTCE / EPS Rise in Interest Rates 1 Target Bonefish ROTCE / EPS Growth Opportunities Economic Profit Improvement Optimize/ Redeploy Capital Continued Efficiencies ▪ Non - Strategic W ind - Down ▪ Infrastructure Reductions ▪ Established Market Profitability / Growth ▪ Product/ Relationship Profitability Improvement ▪ Sales Productivity Improvement ▪ Process Improvements ▪ Branch Network Rationalization ▪ Dividends ▪ Share Buybacks ▪ M&A ▪ Latent I ncome E mbedded in Asset - Sensitive B alance S heet ▪ Specialty Lending ▪ Mid - Atlantic ▪ Middle TN ▪ Houston ▪ Wealth / Investments ▪ Municipals (FTN Financial) 0.5% to 1.0% 1.0 % to 1.5% 1 .0% to 1.5% 1.0 % to 1 .5 % 1.0% to 2.5% 3.0 % to 3.8 % ▪ Latent Income Embedded in Fixed Income Platform Capacity ▪ ADR at $ 1.0 - $1.5mm Increased Fixed Income Activity 1 Rise in interest rates represents cumulative growth rate in net interest income over a 3 - year strategic time horizon. Chart illustrates a quantified path to long - term goals; it contains no forecasts.

 

16 Building a Foundation for Attractive Long - Term Earnings Power ▪ Proven execution capabilities ▪ Unique size, scope, and strengths ▪ Focused on efficiency, productivity, economic profitability, and growth opportunities ▪ Organizational alignment on the path to achieving long - term bonefish profitability ▪ Breadth and depth of talent that will be able to profitably run and grow the company Successfully Executing on Key Priorities FHN is Well Positioned for Attractive Long - Term Earnings Power

 

APPENDIX 17

 

Notable Items 18 Impact to EPS 2 After - Tax Amount 1 Notable Item Pre - Tax Amount Held - for - Sale (Primarily NPL) Portfolio Valuation Adjustment $5.5mm $0.02 $8.2mm Litigation Expense Recovery $31.4mm $0.13 $47.1mm Gains on Sales of Held - for - Sale Loans in Non - Strategic Portfolio $25.2mm $0.11 $39.7mm Loss Accruals Related to Legal Matters $(31.5)mm $(0.13) $(50.0)mm Litigation Expense Recovery $9.5mm $0.04 $15.0mm 3Q14 4Q14 $(35.0)mm $(22.0)mm $(0.09) Net Loss Accruals Related to Legal Matters 1Q15 None 2Q15 Agreement in principle with DOJ/HUD to settle potential claims on FHA loans $(162.5)mm $(124.1)mm $(0.51) 2Q14 None Refer to the financial supplement for further variance trend analysis. 1 After - tax impact assumes a tax rate of ~33% in 2Q14, ~37% in 3Q14, and ~24% in 1Q15,. 2 EPS impact calculated by dividing the after - tax impact by the 237mm diluted shares outstanding in 2Q14 and 3Q14. 1Q15 EPS impact is calculated by dividing the after - tax impact by the 235mm diluted shares FHN would have reported assuming net income available to common instead of net loss available to common .

 

19 2Q15 Credit Quality Summary by Portfolio Numbers may not add to total due to rounding. Data as of 2Q15. NM: Not meaningful. 1 Credit card, Permanent Mortgage, and Other. 2 Credit card, OTC, and Other Consumer. 3 Net charge - offs are annualized. 4 Exercised clean - up calls on jumbo securitizations in 1Q13, 3Q12, 2Q11, and 4Q10, which are now on balance sheet in the Corporate segment. ($ in millions) CRE HE & HELOC Other 1 Total Permanent Mortgage Commercial (C&I & Other) CRE HE & HELOC Permanent Mortgage Other 2 Total Period End Loans $9,398 $1,400 $3,413 $345 $14,556 $113 $434 $0 $1,458 $365 $11 $16,937 30+ Delinquency 0.08% 0.23% 0.47% 1.18% 0.21% 2.51% 0.02% NM 2.06% 2.12% 1.31% 0.42% Dollars $8 $3 $16 $4 $31 $3 $0 $0 $30 $8 $0 $71 NPL % 0.32% 0.84% 0.78% 0.14% 0.47% 2.72% 3.07% NM 6.03% 7.92% 6.86% 1.20% Dollars $30 $12 $27 $0 $69 $3 $13 $0 $88 $29 $1 $203 Net Charge-offs 3 % 0.18% 0.22% 0.08% 5.57% 0.29% NM NM NM NM 0.14% 5.97% 0.21% Dollars $4 $1 $1 $5 $10 NM $0 $0 -$2 $0 $0 $9 Allowance $73 $21 $25 $13 $133 NM $5 $0 $60 $22 $1 $221 Allowance / Loans % 0.78% 1.53% 0.73% 3.72% 0.91% NM 1.23% 7.36% 4.14% 6.11% 4.95% 1.31% Allowance / Charge-offs 4.48x 7.22x 9.73x 0.66x 3.21x NM NM NM NM 44.22x 0.81x 6.15x Regional Banking Corporate 4 Non-Strategic Commercial (C&I & Other)

 

Construction 33% Land 3% Mini - Perm/Non - Construction 64% 20 C&I and CRE Portfolio Detail $1.1 $1.0 $1.2 $1.6 $1.8 $0.7 $0.9 $0.9 $1.0 $1.6 $0.0 $0.5 $1.0 $1.5 $2.0 2Q14 3Q14 4Q14 1Q15 2Q15 Period End Average ▪ $9.8B C&I portfolio , diversified by industry, managed primarily in Regional Banking ▪ $1.4B CRE portfolio, comprising 8% of period - end consolidated loans ▪ Commercial (C&I and CRE) net charge - offs were $5mm for the quarter ▪ Charge - offs were $5.9mm with recoveries of $1.1mm Retail 24% Multi - Family 32% Office 13% Hospitality 11% Industrial 11% CRE: Loan Type CRE: Collateral Type C&I: Loans to Mortgage Companies Data as of 2 Q15. Numbers may not add to total due to rounding. $2.0B

 

21 Core Banking Customers TN 61% CA 8% VA 3% GA 3% Other 25% Consumer Portfolio Overview $1.6 $0.7 $0.0 $0.5 $1.0 $1.5 $2.0 In Draw In Repayment HELOC Draw vs Repayment Balances Percent of Home Equity Portfolio: Months Left in Draw Period 21% 17% 15% 8% 5% 34% 0% 5% 10% 15% 20% 25% 30% 35% 40% 0-12 13-24 25-36 37-48 49-60 >60 Home Equity Portfolio Characteristics Home Equity Geographic Distribution 19% 21% 25% 28% 27% 15% 18% 21% 24% 27% 30% $0.0 $0.5 $1.0 $1.5 $2.0 2Q14 3Q14 4Q14 1Q15 2Q15 Period End Balance Constant Pre-Payment Rate (Right Axis) Non - Strategic Consumer Real Estate Run - Off $2.0B $2.0B First Second Total Balance $2.9B $2.0B $4.9B Original FICO 753 736 746 Refreshed FICO 753 724 741 Original CLTV 77% 81% 79% Full Doc 93% 74% 85% Owner Occupied 94% 95% 94% HELOCs $0.6B $1.6B $2.3B Weighted Average HELOC Utilization 46% 56% 54% Data as of 2Q15. Numbers may not add to total due to rounding.

 

$0 $150 $300 2Q14 3Q14 4Q14 1Q15 2Q15 GSE New Requests Other New Requests Resolved Pipeline 22 Agency & Non - Agency Update Repurchase Resolution Agreements with Both GSEs Total Pipeline of Repurchase Requests 1 $300mm Mortgage Repurchase Reserve Other Whole Loan Sales and Non - Agency ▪ Represent 51% of all active repurchase/make whole requests in 2Q15 pipeline ▪ Some non - Agency FHN loans were bundled with other companies’ loans and securitized by the purchasers ▪ A trustee for a bundler has commenced a legal action seeking repurchase of FHN loans ▪ Certain purchasers have requested indemnity related to FHN loans included in their securitizations ▪ Loan file review process regarding certain bundled FHN loans has been initiated ▪ Net Realized Losses of $0 in 2Q15 due to ~$3mm in mortgage insurance rescission recoveries ($ in millions) 2Q143Q144Q141Q152Q15 Beginning Balance $145 $141 $125 $119 $116 Net Realized Losses $(4) $(13) $(6) $(3) $0 Provision $0 $(4) $0 $0 $0 Loan Sales $0 $2 $0 $0 $0 Ending Balance $141 $125 $119 $116 $116 Data as of 2Q15. Numbers may not add to total due to rounding. 1 Based on UPB. The pipeline represents active investor claims and mortgage insurance (MI) cancellations under review, both of whi ch could occur on the same loan. Excludes MI cancellation notices that have been reviewed and coverage has been lost. MI cancell ati ons that have resulted in lost coverage are included in management’s assessment of the adequacy of repurchase reserves. 2Q14, 3Q14, 4Q14, 1Q15, and 2Q15 pipeline includes $6.5mm, $4.8mm, $4.2mm, $5 .0mm and $1.3mm in other claims, respectively, that pose no risk to the repurchase reserve but require formal acknowledgment with Fannie.

 

FH Proprietary Securitizations Litigation Certificate Breakdown Paid Off 65% Performing UPB 24% 60D+ Delinquent ³ 4% Cumulative Loss 7% 23 $806mm ($ in millions) Deal FHASI 2007-AR2 1 (Schwab) Senior $50.0 $33.6 $14.0 $12.7 $1.4 $2.4 FHAMS 2006-FA6 (FDIC Alabama) Senior $11.1 $3.7 $5.9 $5.0 $0.9 $1.5 FHAMS 2006-FA6 (FDIC Alabama) Senior $15.2 $5.3 $8.6 $7.0 $1.6 $1.3 FHAMS 2006-FA6 (TN Retirement Indemnification) Senior $46.2 $40.4 $4.6 $3.8 $0.8 $1.1 FHAMS 2006-FA7 (FDIC Alabama) Senior $20.7 $7.0 $10.8 $9.0 $1.8 $2.8 FHAMS 2007-FA4 1 (FDIC Alabama) Senior $14.4 $4.4 $7.9 $6.5 $1.4 $2.1 FHAMS 2007-FA1 (FDIC New York) Senior $44.5 $15.6 $22.2 $18.5 $3.8 $6.6 FHAMS 2007-FA2 (FDIC New York) Senior $34.9 $13.0 $17.2 $14.2 $2.9 $4.7 FHAMS 2005-FA8 (FHLB Indemnification) Senior $100.0 $80.5 $18.7 $16.8 $2.0 $0.7 FHAMS 2007-FA3 (MetLife Indemnification) Senior $103.0 $62.4 $31.7 $25.9 $5.8 $8.8 FHAMS 2005-FA10 2 (Royal Park Indemnification) Senior $100.0 $68.1 $27.6 $24.2 $3.4 $4.4 FHAMS 2006-FA2 1 (Royal Park Indemnification) Senior $30.0 $23.7 $5.1 $4.3 $0.7 $1.2 FHAMS 2005-FA9 (Integra REC Indemnification) Junior $2.3 $0.1 $0.0 $0.0 $0.0 $2.2 FHAMS 2006-FA8 (Integra REC Indemnification) Senior $101.5 $64.2 $29.6 $25.4 $4.1 $7.8 FHAMS 2006-FA8 (TN Retirement Indemnification) Senior $100.0 $77.8 $17.6 $15.1 $2.5 $4.7 FHASI 2006-AA8 (TN Retirement Indemnification) Senior $32.5 $23.1 $7.6 $5.8 $1.8 $1.9 Total $806.2 $523.0 $229.1 $194.2 $34.8 $54.2 Cumulative Loss Certificate Original UPB Paid Off Current UPB Performing UPB 60D+ Delinquent Numbers and percentages may not add to total due to rounding. Data source: June 2015 Trustee Reports. 1 The complainants only purchased a portion of these tranches. Original UPB estimated based on the purchase price stated in the co mplaints. All other metrics prorated based on the ratio of purchase price to the total original UPB of the entire tranche. 2 Royal Park is asking for indemnification on $100mm of the $190mm tranche as stated in the indemnification request. 3 60D+ Delinquent defined as a delinquency status of 60 days or more and also bankruptcies, foreclosures and REO in such status for 60 days or more.

 

Reconciliation to GAAP Financials 24 Slides in this presentation use non - GAAP information of return on tangible common equity, as well as expenses, pre - provision net revenue, and net income excluding certain charges/recoveries and various ratios using those measures. That information is not presented according to generally accepted accounting principles (GAAP ) and is reconciled to GAAP information below. Numbers may not add to total due to rounding. 1 Tax rates/assumed tax rates of ~28% in 2Q15, ~32% in 1Q15, and ~25% in 2Q14. ($ in millions) 2Q15 Changes vs Adjusted Consolidated Noninterest Expense 2Q15 1Q15 2Q14 1Q15 2Q14 Consolidated Noninterest Expense (GAAP) $218 $376 $163 -42% 34% Less Litigation Charge/Insurance Recovery (GAAP) $163 -$47 Adjusted Consolidated Noninterest Expense (Non-GAAP) $218 $214 $210 2% 4% Adjusted Consolidated PPNR Consolidated PPNR (GAAP) $79 -$90 $122 NM -36% Plus: 1Q15 Litigation Expense (GAAP) $163 Less: 2Q14 Insurance Recovery (GAAP) $47 Adjusted Consolidated PPNR (Non-GAAP) $79 $73 $75 8% 4% Net Income Available to Common/EPS Excluding Litigation Charge/Insurance Recovery Consolidated Pre-tax Income/Loss (GAAP) $77 -$95 $116 Plus: Litigation Charge/Insurance Recovery (GAAP) $163 -$47 Adjusted Consolidated Pre-tax Income (Non-GAAP) $77 $68 $68 $22 $22 $17 $55 $46 $52 $3 $3 $3 $2 $2 $2 Adjusted Net Income Available to Common Shareholders (Non-GAAP) $51 $42 $47 Diluted Shares/Assumed Diluted Shares with Net Income Instead of Net Loss (Non-GAAP) 235 235 237 $0.22 $0.18 $0.20 22% 10% Return On Tangible Common Equity Average Total Equity (GAAP) $2,512 Less: Average Noncontrolling Interest (GAAP) $295 Less: Preferred Stock (GAAP) $96 Average Common Equity (GAAP) $2,121 Less: Average Intangible Assets (GAAP) $173 Average Tangible Common Equity (Non-GAAP) $1,947 Net Income Available to Common (GAAP) $51 Annualized Return on Average Tangible Common Equity (Non-GAAP) 10.4% Less: Net Income Attributable to Noncontrolling Interest (GAAP) Less: Preferred Stock Dividends (GAAP) Less: Adjusted Tax 1 (Non-GAAP) Adjusted Net Income Excluding Litigation Charge/Insurance Recovery (Non-GAAP) Earnings Per Share Excluding Litigation Charge (Non-GAAP)

 

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