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Progress Continues In First Quarter At 150-Year-Old First Horizon

Stocks in this article: FHN

MEMPHIS, Tenn., April 17, 2014 (GLOBE NEWSWIRE) -- The focus on driving profitability continued in first quarter 2014 as First Horizon National Corp. (NYSE:FHN) celebrates the 150 th anniversary of its founding during the Civil War. First quarter's consolidated net income available to common shareholders was $45 million, or $0.19 per share.

First Horizon's core business of regional banking through First Tennessee and fixed income through FTN Financial generated solid performance. The company continued to invest in those businesses while controlling costs and improving productivity and efficiency. The company also continued to unwind from the mortgage business it sold in 2008, with key mortgage loan repurchase settlements reached over the past few months.

"Our people are focused every day on meeting our customers' financial services needs with a differentiated experience, and because of that we're earning new business and expanding our relationships with customers at First Tennessee and FTN Financial," said Bryan Jordan, First Horizon's chairman and CEO. "We're entering new markets and enhancing specialty businesses that are giving us opportunities to grow profitably over time. We're reducing the overhang of our former mortgage business. In short, we're preparing our company for our next 150 years."     

Financial highlights

  • The company continues to invest in areas that create the most value for customers while reducing costs in other areas. Expenses were down 8 percent from first quarter 2013 to first quarter 2014.    
  • In the regional bank average core deposits were up 2 percent from the same quarter in 2013. Lending increased, too, in specialty lending areas and growth markets, with asset-based lending up 12 percent, Middle Tennessee up 6 percent, commercial real estate up 4 percent and the Mid-Atlantic region – North Carolina, South Carolina, Virginia and North Florida – up 4 percent from first quarter 2013 to first quarter 2014. As the mortgage market has slowed, loans to mortgage companies fell from last quarter. 
  • The fixed income group remained a high-return business and an important part of First Horizon's business mix, making significant contributions to overall fee income in spite of uncertain market conditions that led to lower sales volumes.
  • First quarter's results included $20 million in servicing income associated with a previously announced mortgage servicing sale.     
  • Asset quality trends remain strong, with net charge-offs down 38 percent from first quarter 2013 to first quarter 2014. 
  • Capital ratios remain strong, with estimated Tier 1 capital at 14 percent at the end of first quarter 2014.
FHN CONSOLIDATED SUMMARY RESULTS
Quarterly, Unaudited
 
        1Q14 Changes vs.
(Dollars in thousands, except per share data) 1Q14 4Q13 1Q13  4Q13   1Q13 
Income Statement Highlights          
Net interest income  $ 152,359  $ 157,135  $ 161,382 (3)% (6)%
Noninterest income  140,073  132,860  156,403 5% (10)%
Securities gains/(losses), net  5,657  2,183  24  NM  NM
Total revenue  298,089  292,178  317,809 2% (6)%
Noninterest expense  220,214  257,097  240,540 (14)% (8)%
Provision for loan losses  10,000  15,000  15,000 (33)% (33)%
Income/(loss) before income taxes  67,875  20,081  62,269 NM 9%
Provision/(benefit) for income taxes  18,645  (33,813)  17,730 NM 5%
Income/(loss) from continuing operations  49,230  53,894  44,539 (9)% 11%
Income/(loss) from discontinued operations, net of tax  --  (6)  430 NM  NM 
Net income/(loss)  49,230  53,888  44,969 (9)% 9%
Net income attributable to noncontrolling interest  2,813  2,934  2,813 (4)%  * 
Net income/(loss) attributable to controlling interest  46,417  50,954  42,156 (9)% 10%
Preferred stock dividends  1,550  1,550  1,188 * 30%
Net income/(loss) available to common shareholders  $ 44,867  $ 49,404  $ 40,968 (9)% 10%
Common Stock Data          
Diluted EPS  $ 0.19  $ 0.21  $ 0.17 (10)% 12%
Diluted shares (thousands)  237,401  236,753  242,799 * (2)%
Period-end shares outstanding (thousands)  236,586  236,370  241,225 * (2)%
Balance Sheet Highlights (Period-End)          
Total loans, net of unearned income  $ 15,119,461  $ 15,389,074  $ 15,889,670 (2)% (5)%
Total deposits  16,672,743  16,734,956  16,204,467 * 3%
Total assets  23,941,989  23,789,833  24,803,048 1% (3)%
Total liabilities  21,397,852  21,289,082  22,203,321 1% (4)%
Total equity  2,544,137  2,500,751  2,599,727 2% (2)%
Asset Quality Highlights          
Allowance for loan losses  $ 247,246  $ 253,809  $ 265,218 (3)% (7)%
Allowance / period-end loans 1.64% 1.65% 1.67%    
Net charge-offs  $ 16,563  $ 16,901  $ 26,745 (2)% (38)%
Net charge-offs (annualized) / average loans 0.45% 0.44% 0.67%    
Non-performing assets (NPA)  $ 345,520  $ 361,918  $ 349,278 (5)% (1)%
NPA % (a) 1.87% 1.95% 1.81%    
Key Ratios & Other          
Return on average assets (annualized) (b) 0.82% 0.90% 0.73%    
Return on average common equity (annualized) (c) 8.30% 9.42% 7.48%    
Net interest margin (d) 2.88% 2.98% 2.95%    
Efficiency ratio (e) 75.30% 88.66% 75.69%    
Tier 1 ratio (f) 14.20% 13.87% 13.56%    
Market capitalization (millions)  $ 2,919.5  $ 2,753.7  $ 2,576.3    
NM - Not meaningful
* Amount is less than one percent.
Certain previously reported amounts have been reclassified to agree with current presentation.
(a) NPAs related to the loan portfolio over period-end loans plus foreclosed real estate and other assets.
(b) Calculated using net income.
(c) Calculated using net income available to common shareholders.
(d) Net interest margin is computed using net interest income adjusted to a fully taxable equivalent ("FTE") basis. Refer to the Non-GAAP to GAAP Reconciliation.
(e) Noninterest expense divided by total revenue excluding securities gains/(losses).
(f) Current quarter is an estimate.

Certain measures in this release are non-GAAP, meaning they are not presented in accordance with generally accepted accounting principles (GAAP) in the U.S. First Horizon's management believes such measures are relevant to understanding the results of the company. The non-GAAP item in this release is net interest margin computed using net interest income adjusted for FTE. 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. The reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items can be found in this table:

NON-GAAP to GAAP Reconciliation
(Dollars in Thousands) (Unaudited) 1Q14 4Q13 1Q13
Net interest income adjusted for impact of fully taxable equivalent ("FTE") (Non-GAAP)      
Net interest income (GAAP) $152,359 $157,135 $161,382
FTE adjustment  1,987  2,044  1,787
Net interest income adjusted for impact of FTE (Non-GAAP) $154,346 $159,179 $163,169

Conference call

Management will hold a conference call at 9:00 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.

Participants can call toll-free starting at 8:45 a.m. by dialing 877-303-6618. The number for international participants is 224-357-2205. The conference ID number is 21566704. Participants can also listen to the live audio webcast with the accompanying slide presentation through the website. A replay will be available from noon today until 11:59 p.m. May 1. To listen to the replay, dial 855-859-2056 or 404-537-3406. The passcode is 21566704. The event also will be archived and available by midnight Central Time on the website.

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