UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): July 16, 2019
First Horizon National Corporation
(Exact Name of Registrant as Specified in Charter)
TENNESSEE | 001-15185 | 62-0803242 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
165 MADISON AVENUE, MEMPHIS, TENNESSEE 38103 |
(Address of Principal Executive Offices) (Zip Code) |
(901) 523-4444
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Exchange on which Registered |
$0.625 Par Value Common Capital Stock | FHN | New York Stock Exchange, Inc. |
Depositary Shares, each representing a 1/4,000th interest in a share of Non-Cumulative Perpetual Preferred Stock, Series A | FHN PR A | New York Stock Exchange, Inc. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
Item 7.01. Regulation FD Disclosure.
Furnished as Exhibit 99.1 is a copy of the First Horizon National Corporation ("First Horizon" or "FHN”) earnings release for the quarter ended June 30, 2019, which is scheduled to be released July 16, 2019. The foregoing information is furnished pursuant to Item 2.02, "Regulation of Operations and Financial Condition," and Item 7.01, "Regulation FD Disclosure." The exhibit speaks as of the date thereof and FHN does not assume any obligation to update in the future the information therein. Use of Non-GAAP Measures and Regulatory Measures that are not GAAP in the Exhibit Certain measures are included in the exhibit that are “non-GAAP,” meaning (under U.S. financial reporting rules) they are not presented in accordance with generally accepted accounting principles (“GAAP”) in the U.S. and also are not codified in the U.S. banking regulations currently applicable to FHN. Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN’s management believes such measures are relevant to understanding the financial condition, capital position, and financial results of FHN and its business segments. Non-GAAP measures are reported to FHN’s management and directors through various internal reports. Presentation of regulatory measures, some of which follow regulatory definitions rather than GAAP, provides a meaningful base for comparability to other financial institutions subject to the same regulations as FHN. Such measures are used by the various banking regulators in reviewing the performance, stability, and capital adequacy of financial institutions they regulate. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. Regulatory measures used in the exhibit include: common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; and risk weighted assets (“RWA”), which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios. The non-GAAP measures presented in the exhibit include: Return on average tangible common equity (“ROTCE”), adjusted ROTCE, adjusted return on average assets ("ROA"), adjusted return on average common equity ("ROCE"), adjusted earnings per share ("EPS"), and adjusted efficiency ratio. Reconciliations of non-GAAP to GAAP measures and presentation of the most comparable GAAP items are presented at the end of the earnings release. Forward-Looking Statements This earnings 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, customer and investor responses to these conditions, ability to execute business plans, geopolitical developments, recent and future legislative and regulatory developments, natural disasters, and items mentioned in this earnings release and in FHN's most recent financial supplement and investor slide presentation, as well as critical accounting estimates and other factors described in FHN’s recent filings with the SEC. FHN disclaims any obligation to update any such forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements to reflect future events or developments.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits The following exhibit is furnished pursuant to Items 2.02 and 7.01, is not to be considered "filed" under the Securities Exchange Act 1934, as amended ("Exchange Act"), and shall not be incorporated by reference into any of First Horizon's previous or future filings under the Securities Act of 1933, as amended, or the Exchange Act. Exhibit # Description 99.1 First Horizon National Corporation earnings release issued for the quarter ended June 30, 2019.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
First Horizon National Corporation | ||
Date: July 16, 2019 | By: | /s/ William C. Losch III |
William C. Losch III | ||
Executive Vice President and Chief Financial Officer | ||
EXHIBIT 99.1
First Horizon Reports Second Quarter Results and Highlights
Steady Balance Sheet Growth, Higher Revenues, and Focus on Efficiency Continue Company’s Momentum in 2019
MEMPHIS, Tenn., July 16, 2019 (GLOBE NEWSWIRE) -- First Horizon National Corp. (NYSE:FHN) today announced its second quarter 2019 financial results. Reported earnings per share (EPS) were $0.35, up from $0.31 in first quarter 2019; on an adjusted basis1, earnings per share were $0.42, up from $0.35 in first quarter 2019.
“Our results demonstrated our commitment to achieve our Capital Bank merger objectives and the strategic priorities we laid out during our Investor Day to transform First Horizon,” said Bryan Jordan, First Horizon’s chairman and CEO. “In the second quarter, we gained loan and deposit growth momentum within our key markets and specialty areas, exercised good expense discipline while reinvesting in the company, and continued to strengthen our balance sheet. As we head into the second half of the year, we remain optimistic about our bankers’ ability to continue to deliver on our plan.”
Last month, First Horizon announced that it would bring together its family of companies under a unified set of brand names and a new logo. The unification of First Horizon’s banking, wealth management and fixed income businesses under a common First Horizon brand represents an important step in the company’s transformation.
Highlights for the second quarter include:
Second Quarter 2019 Financial Highlights
Diluted EPS/ Adjusted EPS1 $0.35/ $0.42 | ROA/ Adjusted ROA1 1.11% / 1.32% | ROCE / Adjusted ROCE1 9.79% / 11.78% | ROTCE1/ Adjusted ROTCE1 15.12% / 18.19% |
1These are non-GAAP numbers that are reconciled to reported GAAP numbers in the FHN Non-GAAP to GAAP Reconciliation table.
Consolidated Highlights
Quarterly, Unaudited
2Q19 Changes vs. | ||||||||||||||||||
(Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
Consolidated | ||||||||||||||||||
Income Statement | ||||||||||||||||||
Net interest income | $ | 303,610 | $ | 294,508 | $ | 310,932 | 3 | % | (2 | ) | % | |||||||
Noninterest income | 157,993 | 141,045 | 127,525 | 12 | % | 24 | % | |||||||||||
Total revenues | 461,603 | 435,553 | 438,457 | 6 | % | 5 | % | |||||||||||
Provision /(Provision Credit) for loan losses | 13,000 | 9,000 | — | 44 | % | NM | ||||||||||||
Noninterest expense | 300,394 | 296,090 | 332,768 | 1 | % | (10 | ) | % | ||||||||||
Income before income taxes | 148,209 | 130,463 | 105,689 | 14 | % | 40 | % | |||||||||||
Provision for income taxes | 34,467 | 27,058 | 19,697 | 27 | % | 75 | % | |||||||||||
Net income | 113,742 | 103,405 | 85,992 | 10 | % | 32 | % | |||||||||||
Net income attributable to noncontrolling interest | 2,852 | 2,820 | 2,852 | 1 | % | * | ||||||||||||
Preferred stock dividends | 1,550 | 1,550 | 1,550 | * | * | |||||||||||||
Net income available to common shareholders | $ | 109,340 | $ | 99,035 | $ | 81,590 | 10 | % | 34 | % | ||||||||
NIM | 3.34 | % | 3.31 | % | 3.53 | % | 1 | % | (5 | ) | % | |||||||
Diluted Shares | 315,786 | 319,581 | 328,426 | (1 | ) | % | (4 | ) | % | |||||||||
Balance Sheet | ||||||||||||||||||
Average Loans | $ | 28,672,161 | $ | 27,313,300 | $ | 27,298,787 | 5 | % | 5 | % | ||||||||
Average Deposits | 31,963,544 | 32,497,478 | 30,691,672 | (2 | ) | % | 4 | % | ||||||||||
Average Assets | 41,243,007 | 40,883,192 | 40,173,712 | 1 | % | 3 | % | |||||||||||
Average Common Equity | 4,478,106 | 4,418,180 | 4,161,491 | 1 | % | 8 | % | |||||||||||
NM - Not meaningful | ||||||||||||||||||
* Amount is less than one percent. |
Consolidated Highlights include:
1These are non-GAAP numbers that are reconciled to reported GAAP numbers in the FHN Non-GAAP to GAAP Reconciliation table.
Regional Banking Highlights
Quarterly, Unaudited
2Q19 Changes vs. | ||||||||||||||||||
(Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
Regional Banking | ||||||||||||||||||
Net interest income | $ | 297,328 | $ | 285,913 | $ | 305,935 | 4 | % | (3 | ) | % | |||||||
Noninterest income | 81,475 | 73,030 | 80,767 | 12 | % | 1 | % | |||||||||||
Total revenues | 378,803 | 358,943 | 386,702 | 6 | % | (2 | ) | % | ||||||||||
Provision for loan losses | 17,775 | 13,443 | 4,613 | 32 | % | NM | ||||||||||||
Noninterest expense | 193,268 | 199,468 | 210,038 | (3 | ) | % | (8 | ) | % | |||||||||
Income before income taxes | $ | 167,760 | $ | 146,032 | $ | 172,051 | 15 | % | (2 | ) | % | |||||||
Balance Sheet | ||||||||||||||||||
Average Loans | $ | 27,532,566 | $ | 26,107,250 | $ | 25,814,450 | 5 | % | 7 | % | ||||||||
Average Deposits | 29,953,710 | 29,590,235 | 27,411,039 | 1 | % | 9 | % | |||||||||||
NM - Not meaningful |
Regional Banking highlights include:
Fixed Income Highlights
Quarterly, Unaudited
2Q19 Changes vs. | ||||||||||||||||||
(Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
Fixed Income | ||||||||||||||||||
Net interest income | $ | 6,171 | $ | 7,331 | $ | 9,200 | (16 | ) | % | (33 | ) | % | ||||||
Noninterest income | 65,622 | 53,807 | 38,363 | 22 | % | 71 | % | |||||||||||
Total revenues | 71,793 | 61,138 | 47,563 | 17 | % | 51 | % | |||||||||||
Noninterest expense | 55,770 | 50,774 | 46,933 | 10 | % | 19 | % | |||||||||||
Income before income taxes | $ | 16,023 | $ | 10,364 | $ | 630 | 55 | % | NM | |||||||||
NM - Not meaningful |
Fixed Income Highlights include:
Capital and Liquidity Highlights
Quarterly, Unaudited
2Q19 Changes vs. | ||||||||||||||||||
(Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
Capital and Liquidity Highlights | ||||||||||||||||||
Common dividends declared | $ | 43.7 | $ | 44.3 | $ | 38.9 | (1 | ) | % | 12 | % | |||||||
Preferred dividends declared | 1.6 | 1.6 | 1.6 | * | * | |||||||||||||
Share repurchases | 50.2 | 51.5 | — | (3 | ) | % | NM | |||||||||||
Capital Ratios (a) | ||||||||||||||||||
Common Equity Tier 1 | 9.25 | % | 9.62 | % | 8.98 | % | ||||||||||||
Tier 1 | 10.24 | % | 10.65 | % | 9.98 | % | ||||||||||||
Total Capital | 11.34 | % | 11.78 | % | 11.25 | % | ||||||||||||
Leverage | 9.05 | % | 9.02 | % | 8.56 | % | ||||||||||||
(a) Regulatory capital ratios calculated under the Basel III risk-based capital rules as phased-in; current quarter is an estimate. | ||||||||||||||||||
NM - Not meaningful | ||||||||||||||||||
* Amount is less than one percent. |
Capital and Liquidity Highlights include:
Asset Quality Highlights
Quarterly, Unaudited
2Q19 Changes vs. | ||||||||||||||||||
(Dollars in Thousands) | 2Q19 | 1Q19 | 2Q18 | 1Q19 | 2Q18 | |||||||||||||
Asset Quality Highlights | ||||||||||||||||||
Allowance for loan losses | $ | 192,749 | $ | 184,911 | $ | 185,462 | 4 | % | 4 | % | ||||||||
Allowance / loans % | 0.65 | % | 0.66 | % | 0.67 | % | ||||||||||||
Net Charge-offs | $ | 5,162 | $ | 4,513 | $ | 1,732 | 14 | % | NM | |||||||||
Net charge-offs % | 0.07 | % | 0.07 | % | 0.03 | % | ||||||||||||
Nonperforming Loans (a) | $ | 204,586 | $ | 181,624 | $ | 124,792 | 13 | % | 64 | % | ||||||||
NPL % | 0.69 | % | 0.65 | % | 0.45 | % | ||||||||||||
30+ delinquencies | 58,861 | 63,693 | 85,139 | (8 | ) | % | (31 | ) | % | |||||||||
30+ delinquencies % | 0.20 | % | 0.23 | % | 0.31 | % | ||||||||||||
(a) Excludes loans held-for-sale. | ||||||||||||||||||
NM - Not meaningful | ||||||||||||||||||
Asset Quality Highlights include:
Use of Non-GAAP Measures
Several 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 ("EPS"), adjusted return on average assets ("ROA"), adjusted return on average common equity (“ROCE”), return on average tangible common equity ("ROTCE"), adjusted ROTCE, and adjusted efficiency ratio. 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 | |||||||||
(Dollars and shares in thousands, except per share data) | |||||||||
Adjusted Diluted EPS | 2Q19 | 1Q19 | |||||||
Net income available to common ("NIAC") (GAAP) | a | $ | 109,340 | $ | 99,035 | ||||
Plus Tax effected notable items (Non-GAAP) (a) | $ | 22,184 | $ | 13,660 | |||||
Adjusted NIAC (Non-GAAP) | b | $ | 131,524 | $ | 112,695 | ||||
Diluted Shares (GAAP) | c | 315,786 | 319,581 | ||||||
Diluted EPS (GAAP) | a/c | $ | 0.35 | $ | 0.31 | ||||
Adjusted diluted EPS (Non-GAAP) | b/c | $ | 0.42 | $ | 0.35 | ||||
Adjusted Return on Assets ("ROA") | 2Q19 | 1Q19 | |||||||
Net Income ("NI") (GAAP) | $ | 113,742 | $ | 103,405 | |||||
Plus Tax effected notable items (Non-GAAP) (a) | $ | 22,184 | $ | 13,660 | |||||
Adjusted NI (Non-GAAP) | $ | 135,926 | $ | 117,065 | |||||
NI (annualized) (GAAP) | d | $ | 456,218 | $ | 419,365 | ||||
Adjusted NI (annualized) (Non-GAAP) | e | $ | 545,198 | $ | 474,764 | ||||
Average assets (GAAP) | f | $ | 41,243,007 | $ | 40,883,192 | ||||
ROA (GAAP) | d/f | 1.11 | % | 1.03 | % | ||||
Adjusted ROA (Non-GAAP) | e/f | 1.32 | % | 1.16 | % | ||||
Adjusted Return on Average Common Equity ("ROCE")/ Return on Average Tangible Common Equity ("ROTCE") | 2Q19 | 1Q19 | |||||||
NIAC (GAAP) | $ | 109,340 | $ | 99,035 | |||||
Plus Tax effected notable items (Non-GAAP) (a) | $ | 22,184 | $ | 13,660 | |||||
Adjusted NIAC (Non-GAAP) | $ | 131,524 | $ | 112,695 | |||||
NIAC (annualized) (GAAP) | g | $ | 438,562 | $ | 401,642 | ||||
Adjusted NIAC (annualized) (Non-GAAP) | h | $ | 527,541 | $ | 457,041 | ||||
Average Common Equity (GAAP) | i | $ | 4,478,106 | $ | 4,418,180 | ||||
Intangible Assets (GAAP) (b) | $ | 1,578,505 | $ | 1,584,694 | |||||
Average Tangible Common Equity (Non-GAAP) | j | $ | 2,899,601 | $ | 2,833,486 | ||||
ROCE (GAAP) | g/i | 9.79 | % | 9.09 | % | ||||
Adjusted ROCE (Non-GAAP) | h/i | 11.78 | % | 10.34 | % | ||||
ROTCE (Non-GAAP) | g/j | 15.12 | % | 14.17 | % | ||||
Adjusted ROTCE (Non-GAAP) | h/j | 18.19 | % | 16.13 | % | ||||
Adjusted Efficiency Ratio | 2Q19 | 1Q19 | |||||||
Noninterest expense (GAAP) | k | $ | 300,394 | $ | 296,090 | ||||
Plus notable items (GAAP) | $ | (28,059 | ) | $ | (17,812 | ) | |||
Adjusted noninterest expense (Non-GAAP) | l | $ | 272,335 | $ | 278,278 | ||||
Revenue excluding securities gains/losses (GAAP) | m | $ | 461,554 | $ | 435,522 | ||||
Plus notable items (GAAP) | $ | — | $ | — | |||||
Adjusted revenue excluding securities gains/losses (Non-GAAP) | n | $ | 461,554 | $ | 435,522 | ||||
Efficiency ratio (GAAP) | k/m | 65.08 | % | 67.99 | % | ||||
Adjusted efficiency ratio (Non-GAAP) | l/n | 59.00 | % | 63.90 | % |
(a) 2Q19 includes $18.7 million of pre-tax restructuring-related expenses associated with efficiency initiatives, $9.1 million of pre-tax rebranding expenses, $8.6 million of pre-tax acquisition-related expenses primarily associated with the Capital Bank Financial Corp. (“CBF”) acquisition, and an $8.3 million pre-tax expense reversal related to the settlement of litigation matters; 1Q19 includes $12.2 million of pre-tax restructuring-related expenses and $5.7 million of pre-tax acquisition-related expenses, all of which impact certain performance measures, and have been adjusted using an incremental tax rate of approximately 21 percent in 2Q19 and 23 percent in 1Q19.
(b) Includes goodwill and other intangible assets, net of amortization.
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 www.FirstHorizon.com. The call and slide presentation may involve forward-looking information, including guidance.
Analysts, investors and interested parties may call toll-free starting at 8:15 a.m. Central Time today by dialing 888-317-6003 (if calling from the U.S.) or 412-317-6061 (if calling from outside the U.S) and entering access code 8792639.
A replay of the call will be available beginning at noon Central Time today until midnight Central Time on July 30. To listen to the replay, dial 877-344-7529 (U.S. callers) or 412-317-0088 (international callers); the access code is 10132995. A replay of the webcast will also be available at http://ir.fhnc.com/Event by midnight Central Time on July 16 and will be archived on the site for one year.
Disclaimers and Other Information
This communication 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 First Horizon's annual report on Form 10-K and other recent filings with the SEC. First Horizon 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 or changes in expectations.
About First Horizon
First Horizon National Corp. (NYSE:FHN) provides financial services through its Capital Bank, First Tennessee Bank, FTB Advisors, and FTN Financial businesses. The banking subsidiary was founded in 1864 and has the largest deposit market share in Tennessee. The company operates more than 250 bank locations across the Southeast and 29 FTN Financial offices across the U.S. FTB Advisors wealth management group has more than 300 financial professionals and about $4.8 billion in assets under management. FTN Financial is a capital markets industry leader in fixed income sales, trading and strategies for institutional customers in the U.S. and abroad. The company has been ranked by American Banker magazine among the Top 10 Most Reputable U.S. banks and as one of the nation’s best employers by the National Association for Female Executives and Fortune magazine. More information is available at www.FirstHorizon.com.
FHN-G
CONTACT: First Horizon Investor Relations, Aarti Bowman, (901) 523-4017
First Horizon Media Relations, Silvia Alvarez, (901) 523-4465
A PDF accompanying this announcement is available at http://ml.globenewswire.com/Resource/Download/bb81751b-5347-40cc-9231-4480724df27f