FHN First Horizon Corporation

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): October 30, 2015

 

 

First Horizon National Corporation

(Exact Name of Registrant as Specified in Charter)

 

TN	001-15185	62-0803242
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

165 MADISON AVENUE MEMPHIS, TENNESSEE	38103
(Address of Principal Executive Office)	(Zip Code)

 

Registrant’s telephone number, including area code - (901) 523-4444

 

(Former name or former address, if changed from last report)

 

_____________________________________________

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition

Item 7.01. Regulation FD Disclosure

 

First Horizon has recognized pretax expense of $11.6 million in third quarter 2015 related to an arbitration matter

On October 26, 2015, First Horizon National Corporation (“FHN”) disclosed in a Current Report on Form 8-K that an arbitration panel had reached a decision in a pending matter, but that FHN had not received that decision. The case was brought by two former customers of FTN Financial Securities Corp. (“FTN”), led by First United Bank & Trust, relating to purchases of PreTSL securities from FTN in 2006 and 2007.

Late on October 30, 2015, FHN was advised by FINRA, which administered the arbitration, that the panel found in favor of the claimants and awarded them approximately $11.6 million. After considering the terms of the award, FHN has recognized a pre-tax expense of $11.6 million for the third quarter of 2015 related to this matter. The expense will be recognized as a litigation and regulatory matter in other non-interest expense in the consolidated income statement and within the Fixed Income segment.

Because FHN did not learn the outcome of this matter until October 30, 2015, the financial information included in FHN’s earnings release dated October 16, 2015, and in Exhibit 99.2 to FHN’s Current Report on Form 8-K filed October 23, 2015, did not reflect this additional expense. FHN’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, will reflect the financial effects of this award.

Revised summary financial results are included in Exhibit 99.1 to this Form 8-K. In the near future FHN expects to revise its third quarter 2015 financial supplement, originally issued on October 16, 2015, to reflect the expense and related impacts. The revised supplement will be posted in the Investor Relations section of FHN’s website www.fhnc.com.

 

Item 8.01. Other Events

 

On October 26, 2015, First Horizon National Corporation (“FHN”) disclosed in a Current Report on Form 8-K that an arbitration panel had reached a decision in a pending matter, but that FHN had not received that decision. The case was brought by two former customers of FTN Financial Securities Corp. (“FTN”), led by First United Bank & Trust, relating to purchases of PreTSL securities from FTN in 2006 and 2007. FHN has been advised by FINRA, which administered the arbitration, that the panel found in favor of the claimants and awarded them approximately $11.6 million. Exhibit 99.2 to FHN’s Current Report on Form 8-K filed October 23, 2015, did not reflect this award. FHN’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, will reflect the financial effects of this award.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

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

 

Exhibit #	Description
99.1	Consolidated Summary Results (Quarterly, Unaudited)

 

* * * * *

 

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: November 2, 2015	By:	/s/ Jeff L. Fleming
		Executive Vice President and Chief Accounting Officer

 

EXHIBIT INDEX

 

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

 

Exhibit #	Description
99.1	Consolidated Summary Results (Quarterly, Unaudited)

 

EX-99.1

 

CONSOLIDATED SUMMARY RESULTS
Quarterly, Unaudited
												3Q15 Changes vs.
(Dollars in thousands, except per share data)		3Q15		2Q15		1Q15		4Q14		3Q14		2Q15			3Q14
Income Statement Highlights
Net interest income		$163,562		$166,640		$156,866		$159,050		$159,541		(2)	%		3	%
Noninterest income		125,448		130,293		129,413		119,598		158,677		(4)	%		(21)	%
Securities gains/(losses), net		(345)		8		276		-		(862)		NM			60	%
	Total revenue	288,665		296,941		286,555		278,648		317,356		(3)	%		(9)	%
Noninterest expense		215,436		218,394		376,221		207,309		244,016		(1)	%		(12)	%
Provision for loan losses		1,000		2,000		5,000		6,000		6,000		(50)	%		(83)	%
Income/(loss) before income taxes		72,229		76,547		(94,666)		65,339		67,340		(6)	%		7	%
Provision/(benefit) for income taxes		8,897		21,590		(22,261)		13,699		16,842		(59)	%		(47)	%
Net income/(loss)		63,332		54,957		(72,405)		51,640		50,498		15	%		25	%
Net income attributable to noncontrolling interest		2,977		2,851		2,758		2,980		2,875		4	%		4	%
Net income/(loss) attributable to controlling interest		60,355		52,106		(75,163)		48,660		47,623		16	%		27	%
Preferred stock dividends		1,550		1,550		1,550		1,550		1,550		*			*
	Net income/(loss) available to common shareholders	$58,805		$50,556		$(76,713)		$47,110		$46,073		16	%		28	%
Common Stock Data
Diluted EPS		$0.25		$0.22		$(0.33)		$0.20		$0.19		14	%		32	%
Diluted shares (thousands)		235,058		234,669		232,816		235,448		236,862		*			(1)	%
Period-end shares outstanding (thousands)		234,237		234,021		233,499		234,220		235,249		*			*
Cash dividends declared per share		$0.06		$0.06		$0.06		$0.05		$0.05		*			20	%
Balance Sheet Highlights (Period-End)
Total loans, net of unearned income		$16,725,492		$16,936,772		$16,732,123		$16,230,166		$15,812,017		(1)	%		6	%
Total deposits		18,865,220		18,674,473		18,638,554		18,068,939		16,144,771		1	%		17	%
Total assets		25,387,319		25,239,767		25,715,888		25,668,187		23,982,597		1	%		6	%
Total liabilities		22,807,074		22,721,862		23,216,631		23,086,597		21,370,783		*			7	%
Total equity		2,580,245		2,517,905		2,499,257		2,581,590		2,611,814		2	%		(1)	%
Key Ratios & Other
Return on average assets (annualized) (a)		0.99	%	0.87	%	(1.15)	%	0.83	%	0.84	%
Return on average common equity (annualized) (b)		10.83	%	9.56	%	(14.04)	%	8.27	%	8.16	%
Return on average tangible common equity (annualized) (b) (f)		11.77	%	10.41	%	(15.24)	%	8.92	%	8.79	%
Net interest margin (c)		2.85	%	2.92	%	2.74	%	2.86	%	2.97	%
Fee income to total revenue (d)		43.41	%	43.88	%	45.21	%	42.92	%	49.86	%
Efficiency ratio (e)		74.54	%	73.55	%	NM		74.40	%	76.68	%
Book value per common share		$9.35		$9.09		$9.03		$9.35		$9.44
Tangible book value per common share (f)		$8.61		$8.35		$8.28		$8.60		$8.76
Tangible common equity to tangible assets (f)		8.00	%	7.80	%	7.57	%	7.90	%	8.65	%
Common equity tier 1 ratio (g)		10.71	%	10.41	%	10.30	%	N/A		N/A
Tier 1 ratio (h)		12.11	%	11.98	%	11.84	%	14.46	%	14.47	%
NM - Not meaningful
* Amount is less than one percent.
(a)	Calculated using net income.
(b)	Calculated using net income available to common shareholders.
(c)	Net interest margin is computed using net interest income adjusted to a fully taxable equivalent (“FTE”) basis assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.
(d)	Ratio excludes securities gains/(losses).
(e)	Noninterest expense divided by total revenue excluding securities gains/(losses).
(f)	Refer to the Non-GAAP to GAAP Reconciliation.
(g)	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.
(h)	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.

 

FHN NON-GAAP TO GAAP RECONCILIATION
Quarterly, Unaudited
(Dollars and shares in thousands, except per share data)		3Q15			2Q15			1Q15			4Q14			3Q14
Tangible Common Equity (Non-GAAP)
(A) Total equity (GAAP)		$2,580,245			$2,517,905			$2,499,257			$2,581,590			$2,611,814
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		$2,189,190			$2,126,850			$2,108,202			$2,190,535			$2,220,759
Less: Intangible assets (GAAP) (b)		171,556			172,854			174,152			175,450			160,987
(C) Tangible common equity (Non-GAAP)		$2,017,634			$1,953,996			$1,934,050			$2,015,085			$2,059,772
Tangible Assets (Non-GAAP)
(D) Total assets (GAAP)		$25,387,319			$25,239,767			$25,715,888			$25,668,187			$23,982,597
Less: Intangible assets (GAAP) (b)		171,556			172,854			174,152			175,450			160,987
(E) Tangible assets (Non-GAAP)		$25,215,763			$25,066,913			$25,541,736			$25,492,737			$23,821,610
Average Tangible Common Equity (Non-GAAP)
(F) Average total equity (GAAP)		$2,545,544			$2,511,929			$2,607,521			$2,651,729			$2,631,841
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		$2,154,489			$2,120,874			$2,216,466			$2,260,674			$2,240,786
Less: Average intangible assets (GAAP) (b)		172,191			173,486			174,787			165,769			161,467
(H) Average tangible common equity (Non-GAAP)		$1,982,298			$1,947,388			$2,041,679			$2,094,905			$2,079,319
Annualized Net Income/(Loss) Available to Common Shareholders
(I) Net income/(loss) available to common shareholders (annualized)		$233,302			$202,780			$(311,114)			$186,904			$182,790
Period-end Shares Outstanding
(J) Period-end shares outstanding		234,237			234,021			233,499			234,220			235,249
Ratios
(I)/(H) Return on average tangible common equity (“ROTCE”) (Non-GAAP)		11.77	%		10.41	%		(15.24)	%		8.92	%		8.79	%
(I)/(G) Return on common equity (GAAP)		10.83	%		9.56	%		(14.04)	%		8.27	%		8.16	%
(C)/(E) Tangible common equity to tangible assets (“TCE/TA”) (Non-GAAP)		8.00	%		7.80	%		7.57	%		7.90	%		8.65	%
(A)/(D) Total equity to total assets (GAAP)		10.16	%		9.98	%		9.72	%		10.06	%		10.89	%
(C)/(J) Tangible book value per common share (Non-GAAP)		$8.61			$8.35			$8.28			$8.60			$8.76
(B)/(J) Book value per common share (GAAP)		$9.35			$9.09			$9.03			$9.35			$9.44

(a)	Included in Total equity on the Consolidated Balance Sheet.
(b)	Includes goodwill and other intangible assets, net of amortization.