Profitability and momentum remained strong, generating solid
financial results in the third quarter at First Horizon National
Corp. (NYSE:FHN). Earnings per share increased 7 percent year over
year. Net interest income was up 13 percent, driven by average
total loan growth of 6 percent and growth in higher-return
specialty areas such as loans to mortgage companies and asset-based
lending. In the regional bank, average deposits were up 8 percent,
revenue increased by 7 percent and First Tennessee maintained its
number one deposit market share position in the state of Tennessee.
Consolidated net interest margin expanded to 3.19 percent from 2.96
percent and returns and profitability improved with higher return
on tangible common equity (ROTCE) and return on assets (ROA).
Credit quality trends remain stable.
“Our third quarter results were solid with very good balance
sheet and revenue growth, as well as our continued focus on
controlling costs,” said Bryan Jordan, First Horizon’s chairman and
CEO. “Our people did an excellent job of focusing on customers and
growing the business while dedicating significant amounts of time
to planning the integration of our pending merger with Capital
Bank.”
3Q17 Financial Highlights (all comparisons vs
3Q16)
Diluted EPS$0.28 |
|
Adjusted diluted EPS1$0.32 |
|
ROA20.99% |
|
ROTCE1,212.2% |
|
|
|
|
|
|
Regional Bank |
|
- Revenue up 7% due to increased net interest income
- Net interest income up 10% from loan growth and the benefit of
short term rate increases
- Average loans up 9%
- Average deposits up 8%
|
|
|
|
|
Consolidated |
|
- Net income available to common shareholders up 7%
- Net interest income up 13%
- Net interest margin improved by 23 basis points to 3.19%
- Net charge offs steady at $2.4 million in 3Q17 compared to $2.3
million in 3Q16
- Adjusted EPS for second quarter was $0.321. Notable items in
the quarter:
- Unfavorable impacts of $14 million from the repurchase of
equity securities previously included in a financing transaction;
$8 million related to legal matters; $8 million of
acquisition-related expense
- Positive benefit of $14 million from an effective tax rate
adjustment
|
|
|
|
|
Other Highlights |
|
- Fixed income product average daily revenue at $715,000
- Acquisition of Capital Bank integration on track
- Anticipated closing in 4Q17
|
1Non-GAAP numbers that are reconciled in the non-GAAP table that
follows 2Annualized 3Current estimate |
CONSOLIDATED SUMMARY RESULTS |
Quarterly,
Unaudited |
|
3Q17 Changes vs. |
(Dollars
in thousands, except per share data) |
3Q17 |
|
2Q17 |
|
3Q16 |
|
2Q17 |
3Q16 |
Income
Statement Highlights |
|
|
|
|
|
|
|
|
|
|
Net interest
income |
$ |
209,817 |
|
|
$ |
200,701 |
|
|
$ |
185,195 |
|
|
5 |
|
% |
13 |
|
% |
Noninterest income |
112,411 |
|
|
127,268 |
|
|
148,745 |
|
|
(12 |
) |
% |
(24 |
) |
% |
Securities gains/(losses), net |
6 |
|
|
405 |
|
|
(200 |
) |
|
(99 |
) |
% |
NM |
|
Total revenue |
322,234 |
|
|
328,374 |
|
|
333,740 |
|
|
(2 |
) |
% |
(3 |
) |
% |
Noninterest
expense |
236,869 |
|
|
217,917 |
|
|
233,558 |
|
|
9 |
|
% |
1 |
|
% |
Provision
for loan losses |
— |
|
|
(2,000 |
) |
|
4,000 |
|
|
NM |
|
NM |
|
Income before income taxes |
85,365 |
|
|
112,457 |
|
|
96,182 |
|
|
(24 |
) |
% |
(11 |
) |
% |
Provision
for income taxes |
13,596 |
|
|
17,253 |
|
|
28,547 |
|
|
(21 |
) |
% |
(52 |
) |
% |
Net
income |
71,769 |
|
|
95,204 |
|
|
67,635 |
|
|
(25 |
) |
% |
6 |
|
% |
Net
income attributable to noncontrolling interest |
2,883 |
|
|
2,852 |
|
|
2,883 |
|
|
1 |
|
% |
* |
|
Net income attributable
to controlling interest |
68,886 |
|
|
92,352 |
|
|
64,752 |
|
|
(25 |
) |
% |
6 |
|
% |
Preferred
stock dividends |
1,550 |
|
|
1,550 |
|
|
1,550 |
|
|
* |
|
* |
|
Net
income available to common shareholders |
$ |
67,336 |
|
|
$ |
90,802 |
|
|
$ |
63,202 |
|
|
(26 |
) |
% |
7 |
|
% |
Common Stock
Data |
|
|
|
|
|
|
|
|
|
|
EPS |
$ |
0.29 |
|
|
$ |
0.39 |
|
|
$ |
0.27 |
|
|
(26 |
) |
% |
7 |
|
% |
Basic shares
(thousands) |
233,749 |
|
|
233,482 |
|
|
231,856 |
|
|
* |
|
1 |
|
% |
Diluted EPS |
$ |
0.28 |
|
|
$ |
0.38 |
|
|
$ |
0.27 |
|
|
(26 |
) |
% |
4 |
|
% |
Diluted shares
(thousands) |
236,340 |
|
|
236,263 |
|
|
234,092 |
|
|
* |
|
1 |
|
% |
Period-end shares
outstanding (thousands) |
234,231 |
|
|
234,135 |
|
|
233,235 |
|
|
* |
|
* |
|
Cash dividends declared
per share |
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.07 |
|
|
* |
|
29 |
|
% |
Balance Sheet Highlights (Period-End) |
|
|
|
|
|
|
|
|
|
|
Total loans, net of
unearned income |
$ |
20,166,091 |
|
|
$ |
19,989,319 |
|
|
$ |
19,555,787 |
|
|
1 |
|
% |
3 |
|
% |
Total deposits |
22,099,254 |
|
|
22,333,349 |
|
|
21,574,180 |
|
|
(1 |
) |
% |
2 |
|
% |
Total assets |
29,622,636 |
|
|
29,369,956 |
|
|
28,449,222 |
|
|
1 |
|
% |
4 |
|
% |
Total liabilities |
26,739,085 |
|
|
26,543,068 |
|
|
25,704,640 |
|
|
1 |
|
% |
4 |
|
% |
Total equity |
2,883,551 |
|
|
2,826,888 |
|
|
2,744,582 |
|
|
2 |
|
% |
5 |
|
% |
Asset Quality Highlights |
|
|
|
|
|
|
|
|
|
|
Allowance for loan
losses |
$ |
194,867 |
|
|
$ |
197,257 |
|
|
$ |
201,557 |
|
|
(1 |
) |
% |
(3 |
) |
% |
Allowance / period-end
loans |
0.97 |
|
% |
0.99 |
|
% |
1.03 |
|
% |
|
|
|
|
Net charge-offs |
$ |
2,390 |
|
|
$ |
2,711 |
|
|
$ |
2,250 |
|
|
(12 |
) |
% |
6 |
|
% |
Net charge-offs
(annualized) / average loans |
0.05 |
|
% |
0.06 |
|
% |
0.05 |
|
% |
|
|
|
|
Non-performing assets
(NPA) |
$ |
140,177 |
|
|
$ |
144,149 |
|
|
$ |
173,519 |
|
|
(3 |
) |
% |
(19 |
) |
% |
NPA % (a) |
0.66 |
|
% |
0.68 |
|
% |
0.85 |
|
% |
|
|
|
|
Key Ratios & Other |
|
|
|
|
|
|
|
|
|
|
Return on average
assets ("ROA") (annualized) (b) |
0.99 |
|
% |
1.32 |
|
% |
0.97 |
|
% |
|
|
|
|
Return on average
common equity ("ROE") (annualized) (c) |
10.79 |
|
% |
15.26 |
|
% |
10.80 |
|
% |
|
|
|
|
Return on tangible
common equity ("ROTCE") (annualized) (d) |
12.17 |
|
% |
17.30 |
|
% |
11.90 |
|
% |
|
|
|
|
Net interest margin
(e) |
3.19 |
|
% |
3.07 |
|
% |
2.96 |
|
% |
|
|
|
|
Efficiency ratio
(f) |
73.51 |
|
% |
66.44 |
|
% |
69.94 |
|
% |
|
|
|
|
Common equity tier 1
ratio ("CET1") (g) |
10.03 |
|
% |
9.85 |
|
% |
9.81 |
|
% |
|
|
|
|
Tier 1 ratio (g) |
11.19 |
|
% |
10.99 |
|
% |
11.03 |
|
% |
|
|
|
|
Market
capitalization (millions) |
$ |
4,485.5 |
|
|
$ |
4,078.6 |
|
|
$ |
3,552.2 |
|
|
|
|
|
|
Certain previously reported amounts have been reclassified to
agree with current presentation.NM - Not meaningful* Amount is less
than one percent.(a) NPAs related to the loan portfolio over
period-end loans plus OREO and other assets.(b) Calculated
using net income.(c) Calculated using net income available to
common shareholders.(d) This non-GAAP measure is reconciled to ROE
in the non-GAAP to GAAP reconciliation.(e) 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.(f)
Noninterest expense divided by total revenue excluding securities
gains/(losses).(g) Current quarter is an estimate.
Use of Non-GAAP Measures Two financial measures
in this release are non-GAAP, meaning they are not presented in
accordance with generally accepted accounting principles (GAAP) in
the U.S. The non-GAAP items presented in this release are
adjusted earnings per share, or EPS, and return on tangible common
equity, or ROTCE. These profitability measures are reported to
First Horizon’s management and directors through various internal
reports. First Horizon’s management believes these measures are
relevant to understanding the financial results of First Horizon
and its business segments. Non-GAAP measures are not formally
defined by GAAP or codified in the federal banking regulations, and
other entities may use calculation methods that differ from those
used by First Horizon. First Horizon has reconciled each of these
measures to a comparable GAAP measure below:
FHN NON-GAAP TO
GAAP RECONCILIATION |
Quarterly,
Unaudited |
|
3Q17 Changes vs. |
(Dollars
and shares in thousands, except per share data) |
3Q17 |
|
|
2Q17 |
|
|
3Q16 |
|
|
2Q17 |
|
3Q16 |
Average Tangible Common Equity (Non-GAAP) |
Average total equity
(GAAP) |
$ |
2,866,757 |
|
|
|
$ |
2,778,169 |
|
|
|
$ |
2,718,319 |
|
|
|
3 |
% |
|
5 |
% |
Less: Average
noncontrolling interest (a) |
295,431 |
|
|
|
295,431 |
|
|
|
295,431 |
|
|
|
* |
|
* |
Less: Average preferred
stock (a) |
95,624 |
|
|
|
95,624 |
|
|
|
95,624 |
|
|
|
* |
|
* |
(A) Total average common equity |
2,475,702 |
|
|
|
2,387,114 |
|
|
|
2,327,264 |
|
|
|
4 |
% |
|
6 |
% |
Less:
Average intangible assets (GAAP) (b) |
280,575 |
|
|
|
281,326 |
|
|
|
214,260 |
|
|
|
* |
|
31 |
% |
(B)
Average tangible common equity (Non-GAAP) |
$ |
2,195,127 |
|
|
|
$ |
2,105,788 |
|
|
|
$ |
2,113,004 |
|
|
|
4 |
% |
|
4 |
% |
Annualized Net
Income Available to Common Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
(C) Net
income available to common shareholders (annualized ) (GAAP) |
267,148 |
|
|
|
364,206 |
|
|
|
251,434 |
|
|
|
(27 |
)% |
|
6 |
% |
Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
(C)/(A) Return on
average common equity ("ROE") (GAAP) |
10.79 |
|
% |
|
15.26 |
|
% |
|
10.80 |
|
% |
|
(29 |
)% |
|
* |
(C)/(B)
Return on average tangible common equity ("ROTCE") (Non-GAAP) |
12.17 |
|
% |
|
17.30 |
|
% |
|
11.90 |
|
% |
|
(30 |
)% |
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted EPS (Non-GAAP) |
|
|
|
|
|
3Q17 |
Net income
available to common shareholders (GAAP) |
|
|
|
|
|
|
|
|
$ |
67,336 |
|
Less: After-tax impact of notable items (GAAP)
(c) |
|
|
|
|
|
|
|
|
(7,142 |
) |
Adjusted net income available to common shareholders
(Non-GAAP) |
|
|
|
|
|
|
|
|
74,478 |
|
Diluted
shares (thousands) |
|
|
|
|
|
|
|
|
236,340 |
|
Diluted EPS
(GAAP) |
|
|
|
|
|
|
|
|
$ |
0.28 |
|
Adjusted diluted EPS (Non-GAAP) |
|
|
|
|
|
|
|
|
$ |
0.32 |
|
(a) Included in Total equity on the Consolidated Balance
Sheet.(b) Includes goodwill and other intangible assets, net of
amortization.(c) Includes a $14.3 million pre-tax loss from the
repurchase of equity securities previously included in a financing
transaction, $8.2 million of pre-tax acquisition-related expenses
primarily associated with the Capital Bank Financial (CBF) and
Coastal Securities, Inc. (Coastal) acquisitions, and $8.2 million
of pre-tax loss accruals related to legal matters adjusted using an
incremental tax rate of approximately 32 percent. Also includes
$(13.7) million related to favorable effective tax rate adjustments
primarily associated with the reversal of a capital loss deferred
tax valuation allowance and certain discrete period items.
Conference callManagement will hold a
conference call at 8:30 a.m. Central Time today to review earnings
and performance trends. There will also be a live webcast
accompanied by the slide presentation available in the investor
relations section of www.FirstHorizon.com. The call and slide
presentation may involve forward-looking information, including
guidance.
Callers wishing to participate may call toll-free starting at
8:15 a.m. CT on Oct. 13 by dialing 888-317-6003 and entering access
code 6686690. The number for international participants is
412-317-6061.
Participants can also listen to the live audio webcast with the
accompanying slide presentation through the investor relations
section of www.fhnc.com. A replay will be available from noon
CT on Oct. 13 until midnight CT on Oct. 28. To listen to the
replay, dial 877-344-7529 or 412-317-0088. The access code is
10112671. The event also will be archived and available beginning
Oct. 14 by midnight CT in the events and presentations section
of http://ir.fhnc.com.
Debt Investor MaterialsFirst Horizon expects to
post additional materials for debt investors on Oct. 26 in the
investor relations section of www.FirstHorizon.com First
Horizon will also provide these materials to analysts at upcoming
meetings. The debt investor materials posted may contain
forward-looking statements, including 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 most
recent earnings press release and in more detail in our most
current 10-Q and 10-K reports. First Horizon disclaims any
obligation to update any of the forward-looking statements that are
made from time to time to reflect future events or developments or
changes in expectations.
Disclaimers and Other Information
Forward-Looking Statements This communication contains certain
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 with respect to our
beliefs, plans, goals, expectations, and estimates. Forward-looking
statements are not a representation of historical information, but
instead pertain to future operations, strategies, financial results
or other developments. The words “believe,” “expect,” “anticipate,”
“intend,” “estimate,” “should,” “is likely,” “will,” “going
forward,” and other expressions that indicate future events and
trends identify forward-looking statements.
Forward-looking statements are necessarily based upon estimates
and assumptions that are inherently subject to significant
business, operational, economic and competitive uncertainties and
contingencies, many of which are beyond the control of First
Horizon and Capital Bank Financial Corp. (“Capital Bank”), which
announced a proposed transaction on May 4, 2017, and many of which,
with respect to future business decisions and actions, are subject
to change. Examples of uncertainties and contingencies include,
among other important factors: global, general, and local economic
and business conditions, including economic recession or
depression; expectations of and actual timing and amount of
interest rate movements, including the slope and shape of the yield
curve, which can have a significant impact on a financial services
institution; market and monetary fluctuations, including
fluctuations in mortgage markets; inflation or deflation; customer,
investor, competitor, regulatory, and legislative responses to any
or all of these conditions; demand for First Horizon’s and Capital
Bank’s product offerings; the actions of the Securities and
Exchange Commission (SEC), the Financial Accounting Standards Board
(FASB), the Office of the Comptroller of the Currency (OCC), the
Board of Governors of the Federal Reserve System (Federal Reserve),
the Federal Deposit Insurance Corporation (FDIC), the Financial
Industry Regulatory Authority (FINRA), the U.S. Department of the
Treasury (Treasury), the Municipal Securities Rulemaking Board
(MSRB), the Consumer Financial Protection Bureau (CFPB), the
Financial Stability Oversight Council (Council), the Public Company
Accounting Oversight Board (PCAOB), and other regulators and
agencies, including in connection with the regulatory approval
process associated with the merger; pending, threatened, or
possible future regulatory, administrative, and judicial outcomes,
actions, and proceedings; current or future Executive orders;
changes in laws and regulations applicable to First Horizon and
Capital Bank; the possibility that the proposed transaction will
not close when expected or at all because required regulatory, or
other approvals are not received or other conditions to the closing
are not satisfied on a timely basis or at all; the possibility that
the anticipated benefits of the transaction will not be realized
when expected or at all, including as a result of the impact of, or
problems arising from, the integration of the two companies or as a
result of the strength of the economy and competitive factors in
the areas where First Horizon and Capital Bank do business; the
possibility that the transaction may be more expensive to complete
than anticipated, including as a result of unexpected factors or
events; diversion of management’s attention from ongoing business
operations and opportunities; potential adverse reactions or
changes to business or employee relationships, including those
resulting from the announcement or completion of the transaction;
First Horizon’s and Capital Bank’s success in executing their
respective business plans and strategies and managing the risks
involved in the foregoing; and other factors that may affect future
results of First Horizon and Capital Bank.
Additional factors that could cause results to differ materially
from those contemplated by forward-looking statements can be found
in First Horizon’s Annual Report on Form 10-K for the year ended
December 31, 2016, and in its subsequent Quarterly Reports on Form
10-Q filed with the SEC and available in the “Investor Relations”
section of First Horizon’s website, http://www.firsthorizon.com,
under the heading “SEC Filings” and in other documents First
Horizon files with the SEC, and in Capital Bank’s Annual Report on
Form 10-K for the year ended December 31, 2016 and in its
subsequent Quarterly Reports on Form 10-Q, including for the
quarter ended March 31, 2017, filed with the SEC and available in
the “Investor Relations” section of Capital Bank’s website,
www.CapitalBank-US.com, under the heading “Financials &
Filings” and in other documents Capital Bank files with the
SEC.
Important Other InformationIn connection with the proposed
transaction, First Horizon has filed with the SEC a Registration
Statement on Form S-4 (No. 333-219052) and a definitive Joint Proxy
Statement of First Horizon and Capital Bank and a Prospectus of
First Horizon, as well as other relevant documents concerning the
proposed transaction. The proposed transaction involving First
Horizon and Capital Bank has been approved by First Horizon’s
shareholders and Capital Bank’s stockholders, but remains subject
to other customary conditions to closing. This communication does
not constitute an offer to sell or the solicitation of an offer to
buy any securities. SHAREHOLDERS OF FIRST HORIZON AND CAPITAL BANK
ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE TRANSACTION AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY DO AND WILL CONTAIN
IMPORTANT INFORMATION. Shareholders may obtain a free copy of the
definitive joint proxy statement/prospectus, as well as other
filings containing information about First Horizon and Capital
Bank, without charge, at the SEC’s website
(http://www.sec.gov).
About First HorizonThe 4,300 employees of First
Horizon National Corp. (NYSE:FHN) provide financial services
through more than 160 bank locations across Tennessee and the
southern U.S. and 28 FTN Financial offices across the U.S. The
company was founded in 1864 and has the 14th oldest national bank
charter in the country. First Tennessee, No. 5 on American
Banker’s Top 10 Most Reputable U.S. Banks, has the largest deposit
market share in Tennessee and one of the highest customer retention
rates of any bank in the country. FTN Financial is a capital
markets industry leader in fixed income sales, trading and
strategies for institutional customers in the U.S. and abroad.
First Horizon has been recognized as one of the nation's best
employers by Working Mother and American Banker. More information
is available at www.FirstHorizon.com.
FHN-G
CONTACT:
First Horizon Investor Relations, Aarti Bowman, (901)
523-4017First Horizon Media Relations, James Dowd, (901)
523-4305
First Horizon (NYSE:FHN)
Historical Stock Chart
From Mar 2024 to Apr 2024
First Horizon (NYSE:FHN)
Historical Stock Chart
From Apr 2023 to Apr 2024