Press release from GlobeNewswire (a Nasdaq OMX company)
EPS Up 42% at First Horizon
Friday, April 19, 2013
EPS Up 42% at First Horizon04:00 EDT Friday, April 19, 2013
MEMPHIS, Tenn., April 19, 2013 (GLOBE NEWSWIRE) -- First Horizon National Corp. (NYSE:FHN) saw first-quarter diluted earnings per common share improve 42 percent from 2012 to 2013. The company has been able to put more energy into its long-term businesses of regional banking and capital markets as it improved credit quality and reduced expenses and the drag of its non-strategic businesses over the past several quarters. Today First Horizon announced first quarter diluted earnings per common share of $0.17 and net income available to common shareholders of $41.0 million.
"We're focusing on areas of our business where we can create value for the long term – winning new business, developing our people, smartly reducing expenses, investing in technology, streamlining the way we get things done," said Bryan Jordan, First Horizon chairman and CEO. "The strength of our regional banking business, First Tennessee, and our capital markets business, FTN Financial, is apparent as we've refocused where we know how to compete and create real value for our customers."
- Year over year the bankers at First Tennessee grew average loans 6 percent and average core deposits 4 percent while reducing expenses 8 percent.
- FTN Financial continued to provide steady fee income and high returns, with fixed income average daily revenues of $1.1 million in the first quarter and an annualized return on assets of approximately 2 percent.
- The company's work to improve its efficiency ratio continued to yield results. Personnel costs are down following completion of the voluntary separation program on March 31 and earlier changes to the pension plan. Total expenses declined 25 percent from first quarter 2012 and 11 percent from fourth quarter 2012 to first quarter 2013. Since first quarter 2012 the efficiency ratio has improved 10 percentage points.
- Seasonal factors, a shift in loan mix, pressure on yields on investments and loans and other factors weighed on results for the quarter. Net interest income and the net interest margin decreased from fourth quarter 2012. However, noninterest income increased and noninterest expense improved from fourth quarter to first quarter.
Credit quality trends
- Asset quality trends continued to be favorable, and loan portfolios continue to improve. Non-performing assets continued to decline, while annualized net charge-offs decreased 49 basis points from a year ago.
- Capital ratios remained strong, well above well-capitalized levels.
- First Horizon continued to strategically return capital to shareholders, increasing the quarterly dividend per common share to $0.05 and repurchasing $30.0 million in common shares in the first quarter through its $300 million common stock repurchase program.
|FHN CONSOLIDATED SUMMARY RESULTS|
|1Q13 Changes vs.|
|(Dollars in thousands, except per share data)||1Q13||4Q12||3Q12||2Q12||1Q12||4Q12||1Q12|
|Income Statement Highlights|
|Net interest income||$ 161,382||$ 170,598||$ 173,465||$ 172,675||$ 171,929||(5)%||(6)%|
|Securities gains/(losses), net||24||(4,700)||--||5,065||328||NM||NM|
|Provision for loan losses||15,000||15,000||40,000||15,000||8,000||*||88%|
|Income/(loss) before income taxes||62,269||30,680||33,834||(210,595)||44,376||NM||40%|
|Provision/(benefit) for income taxes||17,730||(12,914)||5,260||(88,178)||10,570||NM||68%|
|Income/(loss) from continuing operations||44,539||43,594||28,574||(122,417)||33,806||2%||32%|
|Income/(loss) from discontinued operations, net of tax||430||(12)||108||487||(435)||NM||NM|
|Net income attributable to noncontrolling interest||2,813||2,901||2,875||2,844||2,844||(3)%||(1)%|
|Net income/(loss) attributable to controlling interest||42,156||40,681||25,807||(124,774)||30,527||4%||38%|
|Preferred stock dividends||1,188||--||--||--||--||NM||NM|
|Net income/(loss) available to common shareholders||$ 40,968||$ 40,681||$ 25,807||$ (124,774)||$ 30,527||1%||34%|
|Common Stock Data|
|Diluted EPS from continuing operations||$ 0.17||$ 0.17||$ 0.10||$ (0.50)||$ 0.12||*||42%|
|Diluted EPS||$ 0.17||$ 0.17||$ 0.10||$ (0.50)||$ 0.12||*||42%|
|Diluted shares (thousands)||242,799||246,132||248,306||249,104||255,369||(1)%||(5)%|
|Period-end shares outstanding (thousands)||241,225||243,598||247,134||248,810||252,667||(1)%||(5)%|
|Cash dividends declared per share||$ 0.05||$ 0.01||$ 0.01||$ 0.01||$ 0.01||NM||NM|
|Balance Sheet Highlights (Period-End)|
|Total loans, net of unearned income (Restricted -- $.1 billion) (a)||$ 15,889,670||$ 16,708,582||$ 16,523,783||$ 16,185,763||$ 15,971,330||(5)%||(1)%|
|Total assets (Restricted -- $.1 billion) (a)||25,166,427||25,520,140||25,739,830||25,492,955||25,678,969||(1)%||(2)%|
|Total liabilities (Restricted -- $.1 billion) (a)||22,566,700||23,010,934||23,207,942||22,978,549||23,004,796||(2)%||(2)%|
|Asset Quality Highlights|
|Allowance for loan losses (Restricted -- $3.7 million) (a)||$ 265,218||$ 276,963||$ 281,744||$ 321,051||$ 346,016||(4)%||(23)%|
|Allowance / period-end loans||1.67%||1.66%||1.71%||1.98%||2.17%|
|Net charge-offs||$ 26,745||$ 19,781||$ 79,307||$ 39,965||$ 46,335||35%||(42)%|
|Net charge-offs (annualized) / average loans||0.67%||0.48%||1.92%||1.01%||1.16%|
|Non-performing assets (NPA)||$ 418,385||$ 419,369||$ 450,391||$ 466,873||$ 511,320||*||(18)%|
|NPA % (b)||1.81%||1.84%||2.15%||2.32%||2.56%|
|Key Ratios & Other|
|Return on average assets (annualized) (c)||0.73%||0.69%||0.45%||(1.96)%||0.53%|
|Return on average common equity (annualized) (d)||7.48%||7.20%||4.59%||(21.06)%||5.15%|
|Net interest margin (e) (f)||2.95%||3.09%||3.15%||3.16%||3.12%|
|Fee income to total revenue (g)||49.22%||46.98%||48.53%||47.12%||54.03%|
|Efficiency ratio (h)||75.69%||84.34%||78.09%||161.45%||86.08%|
|Book value per common share||$ 9.16||$ 9.09||$ 9.05||$ 8.92||$ 9.42|
|Tangible book value per common share (f)||$ 8.51||$ 8.44||$ 8.41||$ 8.28||$ 8.78|
|Adjusted tangible common equity to risk weighted assets (f) (i)||9.88%||9.93%||10.03%||9.97%||10.88%|
|Market capitalization (millions)||$ 2,576.3||$ 2,414.1||$ 2,379.9||$ 2,152.2||$ 2,622.7|
|Full time equivalent employees||4,381||4,507||4,585||4,619||4,629|
|NM - Not meaningful|
|* Amount is less than one percent.|
|(a) Restricted balances parenthetically presented are as of March 31, 2013.|
|(b) NPAs related to the loan portfolio over period-end loans plus foreclosed real estate and other assets.|
|(c) Calculated using net income.|
|(d) Calculated using net income available to common shareholders.|
|(e) Net interest margin is computed using total net interest income adjusted for FTE.|
|(f) Refer to the Non-GAAP to GAAP Reconciliation.|
|(g) Ratio excludes securities gains/(losses).|
|(h) Noninterest expense divided by total revenue excluding securities gains/(losses).|
|(i) Current quarter is an estimate.|
Use of non-GAAP measures
Certain measures are included in this release that are non-GAAP, meaning they are not presented in accordance with generally accepted accounting principles (GAAP) in the U.S. FHN's management believes such measures are relevant to understanding the capital position and results of the company. The non-GAAP items presented in this release are tangible book value per common share, adjusted tangible common equity to risk-weighted assets and net interest margin computed using net interest income adjusted for FTE. These measures are reported to FHN's management and board of directors through various internal reports. Additionally, disclosure of the non-GAAP capital ratios provides a meaningful base for comparability to other financial institutions as demonstrated by their use by the various banking regulators in reviewing the capital adequacy of financial institutions. 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 FHN. 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|
|(Period End, Dollars in Thousands except per share data) (Unaudited)||1Q13||4Q12||3Q12||2Q12||1Q12|
|Tangible Common Equity (Non-GAAP)|
|(A) Total equity (GAAP)||$2,599,727||$2,509,206||$2,531,888||$2,514,406||$2,674,173|
|Less: Noncontrolling interest (a)||295,257||295,165||295,165||295,165||295,165|
|Less: Preferred stock||95,624||--||--||--||--|
|(B) Total common equity||2,208,846||2,214,041||2,236,723||2,219,241||2,379,008|
|Less: Intangible assets (GAAP) (b)||156,014||156,942||157,921||158,901||159,880|
|(C) Tangible common equity (Non-GAAP)||2,052,832||2,057,099||2,078,802||2,060,340||2,219,128|
|Less: Unrealized gains on AFS securities, net of tax||48,591||55,250||63,923||63,679||67,077|
|(D) Adjusted tangible common equity (Non-GAAP)||$2,004,241||$2,001,849||$2,014,879||$1,996,661||$2,152,051|
|Period-end Shares Outstanding|
|(E) Period-end shares outstanding||241,225||243,598||247,134||248,810||252,667|
|Risk Weighted Assets|
|(F) Risk weighted assets (c) (d)||$ 20,278,500||$ 20,153,430||$ 20,082,979||$ 20,022,430||$ 19,783,405|
|(D)/(F) Adjusted tangible common equity to risk weighted assets ("TCE/RWA") (Non-GAAP) (c)||9.88%||9.93%||10.03%||9.97%||10.88%|
|(C)/(E) Tangible book value per common share (Non-GAAP)||$8.51||$8.44||$8.41||$8.28||$8.78|
|Net interest income adjusted for impact of fully taxable equivalent ("FTE") (Non-GAAP)|
|Net interest income (GAAP)||$161,382||$170,598||$173,465||$172,675||$171,929|
|Net interest income adjusted for impact of FTE (Non-GAAP)||$163,169||$172,440||$175,217||$174,431||$173,588|
|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.|
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 www.fhnc.com. 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 877-303-6618. The number for international participants is 224-357-2205. The conference ID number is 29081306.
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 3. To listen to the replay, dial 855-859-2056 or 404-537-3406. The passcode is 29081306. The event also will be archived and available by midnight Central Time on the website.
This press release contains forward-looking statements involving significant risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking information. Those factors include general economic and financial market conditions, including expectations of and actual timing and amount of interest rate movements including the slope of the yield curve, competition, ability to execute business plans, geopolitical developments, recent and future legislative and regulatory developments, inflation or deflation, market (particularly real estate market) and monetary fluctuations, natural disasters, customer, investor and regulatory responses to these conditions and items already mentioned in this press release, as well as critical accounting estimates and other factors described in FHN's annual report on Form 10-K and other recent filings with the SEC. FHN disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements included herein or therein to reflect future events or developments.
About First Horizon
The 4,300 employees of First Horizon National Corp. (NYSE:FHN) provide financial services through more than 170 First Tennessee Bank locations in and around Tennessee and 21 FTN Financial Group offices in the U.S. and abroad. First Tennessee has the leading combined market deposit share in the counties where it does business 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 clients in the U.S. and abroad. First Horizon has been recognized as one of the nation's best employers by AARP and Working Mother magazines. More information is available at www.fhnc.com.
CONTACT: First Horizon Investor Relations, Aarti Bowman, (901) 523-4017 First Horizon Media Relations, Kim Cherry, (901) 523-4380