MEMPHIS, Tenn., Oct. 19, 2012 (GLOBE NEWSWIRE) -- Third quarter saw continued solid performance and improved profitability from the regional banking and capital markets businesses at First Horizon National Corp. (NYSE:FHN). Revenues, loans, deposits and fixed income activity all were up in the third quarter, and the mortgage repurchase provision expense for the quarter was zero as expected.
Third-quarter net income available to common shareholders was $26 million. Recently issued regulatory guidelines on consumer loans had a negative impact of $0.07 on earnings per share, which was $0.10 for the quarter.
"Our employees continue to do a fantastic job building relationships with our customers, winning new business and working more efficiently, and that's reflected in the financial results for our core businesses," said Bryan Jordan, First Horizon chairman and CEO. "We're continuing to unwind our non-strategic businesses, simplify our processes and create new ways of connecting with our customers."Financial results
- Revenues, loans and deposits all were up in the third quarter. Higher loan balances resulted in improved net interest income and contributed to a 2 percent increase in total revenue from second to third quarter. Total consolidated average loans were up 3 percent year over year, and average loans in the C&I portfolio grew 15 percent from a year ago.
- First Tennessee remains the top bank in our West and East regions in Tennessee and gained 100 basis points of share in Middle Tennessee, according to recently released FDIC deposit data. Average total loans in the regional bank were up 12 percent from a year ago. Average core deposits in the regional bank increased 9 percent year over year.
- FTN Financial continues to be a major contributor to fee income and provides significant returns for First Horizon, with third quarter fixed income average daily revenue of $1.2 million, above second quarter's level.
- Consolidated expenses were down 18 percent year over year reflecting the zero mortgage repurchase expense for the third quarter and continued success with our efficiency initiatives.
- Recently issued regulatory guidelines on performing consumer loans led us to take an incremental loan loss provision with a negative per-share after-tax impact of $0.07. Our third quarter loan loss provision was $40 million, which included $30 million related to the implementation of regulatory guidance.
- Consolidated net charge-offs for the third quarter were $79 million, a 25 percent improvement from last year, and included $40 million related to the recently issued regulatory guidance. Third quarter 2011's consolidated net charge-offs included $40 million from sales of non-performing assets.
- Non-performing assets for the third quarter were down 23 percent year over year to $450 million. Of that, $31 million was related to the recent regulatory guidance.
- Capital ratios remain strong, well above well-capitalized levels.
- Shareholders received a dividend of $.01 per share on Oct. 1.
- We repurchased $15 million in stock in the second quarter, leaving $60 million available under our $200 million stock repurchase program.
|FHN CONSOLIDATED SUMMARY RESULTS|
|3Q12 Changes vs.|
|(Dollars in thousands, except per share data)||3Q12||2Q12||1Q12||4Q11||3Q11||2Q12||3Q11|
|Income Statement Highlights|
|Net interest income||$ 173,465||$ 172,675||$ 171,929||$ 178,877||$ 176,340||*||(2)%|
|Securities gains/(losses), net||--||5,065||328||203||35,162||NM||NM|
|Provision for loan losses||40,000||15,000||8,000||10,000||32,000||NM||25%|
|Income/(loss) before income taxes||33,834||(210,595)||44,376||38,037||42,519||NM||(20)%|
|Provision/(benefit) for income taxes||5,260||(88,178)||10,570||(526)||8,367||NM||(37)%|
|Income/(loss) from continuing operations||28,574||(122,417)||33,806||38,563||34,152||NM||(16)%|
|Income/(loss) from discontinued operations, net of tax||108||487||(435)||(752)||4,828||(78)%||(98)%|
|Net income attributable to noncontrolling interest||2,875||2,844||2,844||2,871||2,875||1%||*|
|Net income/(loss) available to common shareholders||$ 25,807||$ (124,774)||$ 30,527||$ 34,940||$ 36,105||NM||(29)%|
|Common Stock Data|
|Diluted EPS from continuing operations||$ 0.10||$ (0.50)||$ 0.12||$ 0.13||$ 0.12||NM||(17)%|
|Diluted EPS||$ 0.10||$ (0.50)||$ 0.12||$ 0.13||$ 0.14||NM||(29)%|
|Diluted shares (thousands)||248,306||249,104||255,369||260,372||262,803||*||(6)%|
|Period-end shares outstanding (thousands)||247,134||248,810||252,667||257,468||263,619||(1)%||(6)%|
|Cash dividends declared per share||$ 0.01||$ 0.01||$ 0.01||$ 0.01||$ 0.01|
|Balance Sheet Highlights (Period-End)|
|Total loans, net of unearned income (Restricted -- $ .1 billion) (a)||$ 16,523,783||$ 16,185,763||$ 15,971,330||$ 16,397,127||$ 16,241,402||2%||2%|
|Total assets (Restricted -- $ .1 billion) (a)||25,739,830||25,492,955||25,678,969||24,789,384||25,571,469||1%||1%|
|Total liabilities (Restricted -- $ .1 billion) (a)||23,207,942||22,978,549||23,004,796||22,104,747||22,828,239||1%||2%|
|Asset Quality Highlights|
|Allowance for loan losses (Restricted -- $ 4.4 million) (a)||$ 281,744||$ 321,051||$ 346,016||$ 384,351||$ 449,645||(12)%||(37)%|
|Allowance / period-end loans||1.71%||1.98%||2.17%||2.34%||2.77%|
|Net charge-offs (b)||$ 79,307||$ 39,965||$ 46,335||$ 75,294||$ 106,446||98%||(25)%|
|Net charge-offs (annualized) / average loans (b)||1.92%||1.01%||1.16%||1.84%||2.65%|
|Non-performing assets (NPA)||$ 450,391||$ 466,873||$ 511,320||$ 521,161||$ 582,572||(4)%||(23)%|
|NPA % (c)||2.15%||2.32%||2.56%||2.57%||3.02%|
|Key Ratios & Other|
|Return on average assets (annualized) (d)||0.45%||(1.96)%||0.53%||0.60%||0.62%|
|Return on average common equity (annualized) (e)||4.59%||(21.06)%||5.15%||5.69%||5.90%|
|Net interest margin (f) (g)||3.15%||3.16%||3.12%||3.23%||3.23%|
|Fee income to total revenue (h)||48.53%||47.12%||54.03%||50.29%||51.30%|
|Efficiency ratio (i)||78.09%||161.45%||86.08%||86.71%||89.13%|
|Book value per common share||$ 9.05||$ 8.92||$ 9.42||$ 9.28||$ 9.29|
|Tangible book value per common share (g)||$ 8.41||$ 8.28||$ 8.78||$ 8.66||$ 8.68|
|Adjusted tangible common equity to risk weighted assets (g)||10.03%||9.97%||10.88%||10.80%||11.09%|
|Market capitalization (millions)||$ 2,379.9||$ 2,152.2||$ 2,622.7||$ 2,059.7||$ 1,571.2|
|Full time equivalent employees||4,585||4,619||4,629||4,718||4,812||(1)%||(5)%|
|NM - Not meaningful|
|* Amount is less than one percent.|
|(a) Restricted balances parenthetically presented are as of September 30, 2012.|
|(b) 3Q 12 includes approximately $40 million of charge-offs associated with the implementation of new regulatory guidance.|
|(c) NPAs related to the loan portfolio over period-end loans plus foreclosed real estate and other assets.|
|(d) Calculated using net income.|
|(e) Calculated using net income available to common shareholders.|
|(f) Net interest margin is computed using total net interest income adjusted for FTE.|
|(g) Refer to the Non-GAAP to GAAP Reconciliation.|
|(h) Ratio excludes securities gains/(losses).|
|(i) Noninterest expense divided by total revenue excluding securities gains/(losses).|
|NON-GAAP to GAAP Reconciliation|
|(Period End, Dollars in Thousands except per share data) (Unaudited)||3Q12||2Q12||1Q12||4Q11||3Q11|
|Tangible Common Equity (Non-GAAP)|
|(A) Total equity (GAAP)||$ 2,531,888||$ 2,514,406||$ 2,674,173||$ 2,684,637||$ 2,743,230|
|Less: Noncontrolling interest (a)||295,165||295,165||295,165||295,165||295,165|
|(B) Total common equity||2,236,723||2,219,241||2,379,008||2,389,472||2,448,065|
|Less: Intangible assets (GAAP) (b)||157,921||158,901||159,880||159,902||160,902|
|(C) Tangible common equity (Non-GAAP)||$ 2,078,802||$ 2,060,340||$ 2,219,128||$ 2,229,570||$ 2,287,163|
|Less: Unrealized gains on AFS securities, net of tax||63,923||63,679||67,077||67,069||79,358|
|(D) Adjusted tangible common equity (Non-GAAP)||$ 2,014,879||$ 1,996,661||$ 2,152,051||$ 2,162,501||$ 2,207,805|
|Period-end Shares Outstanding|
|(E) Period-end shares outstanding||247,134||248,810||252,667||257,468||263,619|
|Risk weighted assets|
|(F) Risk weighted assets (c) (d)||$ 20,095,037||$ 20,022,430||$ 19,783,405||$ 20,026,412||$ 19,910,843|
|(D)/(F) Adjusted tangible common equity to risk weighted assets ("TCE/RWA") (Non-GAAP) (c)||10.03%||9.97%||10.88%||10.80%||11.09%|
|(C)/(E) Tangible book value per common share (Non-GAAP)||$ 8.41||$ 8.28||$ 8.78||$ 8.66||$ 8.68|
|Net interest income adjusted for impact of fully taxable equivalent ("FTE") (Non-GAAP)|
|Net interest income (GAAP)||$ 173,465||$ 172,675||$ 171,929||$ 178,877||$ 176,340|
|Net interest income adjusted for impact of FTE (Non-GAAP)||$ 175,217||$ 174,431||$ 173,588||$ 180,527||$ 177,895|
|Earnings per share impact of certain charges|
|Incremental loan loss provisioning associated with recently issued regulatory guidance||$ (30,000)|
|Tax benefit (38.40%)||11,520|
|After-tax impact of incremental loan loss provisioning||$ (18,480)|
|Diluted Shares (GAAP)||248,306|
|Per share impact of incremental loan loss provisioning (Non-GAAP)||$ (0.07)|
|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) Current quarter is an estimate.|
|(d) Defined by and calculated in conformity with bank regulations.|
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