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2Q EPS Up As First Horizon Creates Strong Momentum

MEMPHIS, Tenn., July 18, 2014 (GLOBE NEWSWIRE) -- Strong performance highlighted by growth in loans and net interest income and the recovery of certain litigation costs yielded First Horizon National Corp. (NYSE:FHN) earnings per share of $0.32 for the second quarter, compared to EPS of $0.19 last quarter.

Total loans were up 4 percent from first to second quarter in First Horizon's regional banking business, First Tennessee, which has the largest market share in Tennessee. The bank saw double-digit year-over-year loan growth in asset-based lending, commercial real estate and its Mid-Atlantic region that includes the Carolinas, Virginia and North Florida. Loan growth was up 8 percent year-over-year in Middle Tennessee, and the banking team also started to make loan commitments in the bank's new markets of Houston, Charleston, S.C., and Jacksonville, Fla. The capital markets segment had a $47 million pre-tax litigation expense recovery in the quarter.             

First Horizon continues to reduce the drag of the mortgage business the company sold in 2008, with non-strategic loans now making up less than 19 percent of the loan portfolio. In April the company settled with FHFA, and non-strategic average loans were reduced 17 percent compared to second quarter 2013.               

"As we celebrate our 150 th anniversary, we are focused on building First Tennessee and FTN Financial while improving our customer focus and the economic profitability in every area of the company," said Bryan Jordan, First Horizon's chairman and CEO. "It's gratifying to see the success of our 4,200 employees serving customers paying off with continued profitability that benefits our shareholders and our communities."

Financial highlights
  • Net income available to common shareholders was $76.8 million, or $0.32 per diluted share, in the second quarter, compared to $0.19 per diluted share in the first quarter.
  • In the regional bank, First Tennessee's pre-tax income increased to $72.9 million in the second quarter, compared to $56.0 million in the first quarter.
  • Fixed income revenue was $40.5 million in the second quarter compared to $49.6 million in the first quarter, a reflection of market conditions that led to lower average daily revenues at FTN Financial, which remains a significant contributor of fee income and an important part of First Horizon's business mix.       
  • Asset quality remained strong. The provision for loan losses declined to $5.0 million in the second quarter from $10.0 million in the first quarter.
  • In the second quarter First Horizon reached settlement agreements with insurance companies to recover $47.1 million of expenses related to the Sentinel litigation, which First Horizon settled in 2011.
  • A fair value adjustment primarily related to the non-performing portion of the held-for-sale mortgage banking loan portfolio favorably impacted non-strategic earnings by $8.2 million for the second quarter.
        2Q14 Changes vs.  
(Dollars in thousands, except per share data) 2Q14 1Q14 2Q13  1Q14   2Q13 
Income Statement Highlights           
Net interest income  $ 156,768  $ 152,359  $ 160,019 3% (2)%
Noninterest income   128,824  140,073  142,983 (8)% (10)%
Securities gains/(losses), net  (1,923)  5,657  (351)  NM  NM
Total revenue  283,669  298,089  302,651 (5)% (6)%
Noninterest expense   165,332  220,214  227,408 (25)% (27)%
Provision for loan losses  5,000  10,000  15,000 (50)% (67)%
Income/(loss) before income taxes  113,337  67,875  60,243 67% 88%
Provision/(benefit) for income taxes  32,157  18,645  15,008 72% NM
Income/(loss) from continuing operations  81,180  49,230  45,235 65% 79%
Income/(loss) from discontinued operations, net of tax  --  --  1  NM   NM 
Net income/(loss)  81,180  49,230  45,236 65% 79%
Net income attributable to noncontrolling interest   2,859  2,813  2,843 2%  1%
Net income/(loss) attributable to controlling interest  78,321  46,417  42,393 69% 85 %
Preferred stock dividends  1,550  1,550  1,550 * *
Net income/(loss) available to common shareholders  $ 76,771  $ 44,867  $ 40,843 71% 88%
Common Stock Data          
Diluted EPS  $ 0.32  $ 0.19  $ 0.17 68% 88%
Diluted shares (thousands)  237,250  237,401  240,891 * (2)%
Period-end shares outstanding (thousands)  237,147  236,586  240,555 * (1)%
Balance Sheet Highlights (Period-End)          
Total loans, net of unearned income  $ 15,795,709  $ 15,119,461  $ 16,197,952 4% (2)%
Total deposits  16,157,487  16,672,743  17,011,884 (3)% (5)%
Total assets  24,222,750  23,941,989  24,852,800 1% (3)%
Total liabilities  21,596,599  21,397,852  22,306,392 1% (3)%
Total equity   2,626,151  2,544,137  2,546,408 3% 3%
Asset Quality Highlights          
Allowance for loan losses  $ 243,628  $ 247,246  $ 261,934 (1)% (7)%
Allowance / period-end loans 1.54%  1.64% 1.62%    
Net charge-offs   $ 8,618  $ 16,563  $ 18,284 (48)% (53)%
Net charge-offs (annualized) / average loans  0.22% 0.45% 0.46%    
Non-performing assets (NPA)   $ 339,581  $ 345,520  $ 432,552 (2)% (21)%
NPA % (a) 1.71%  1.87% 2.25%    
Key Ratios & Other          
Return on average assets (annualized) (b) 1.38% 0.83% 0.74%    
Return on average common equity (annualized) (c) 14.14% 8.48% 7.46%    
Net interest margin (d) 2.97% 2.88% 2.96%    
Efficiency ratio (e) 57.89% 75.30% 75.05%    
Tier 1 ratio (f) 14.20% 14.26% 13.28%    
Market capitalization (millions)  $ 2,812.6  $ 2,919.5  $ 2,694.2    
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 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 assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.
(e) Noninterest expense divided by total revenue excluding securities gains/(losses).          
(f) Current quarter is an estimate.          

Conference call

Management 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 . The call and slide presentation may involve forward-looking information, including guidance.

Participants can call toll-free starting at 8:15 a.m. by dialing 888-317-6016. The number for international participants is 412-317-6016. 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 8:00 a.m. Aug. 4. To listen to the replay, dial 877-344-7529 or 412-317-0088. The access code is 10049015. The event also will be archived and available by midnight Central Time tomorrow on the website.

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