EX-99.1 2 d613379dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

THIRD QUARTER 2013

FINANCIAL SUPPLEMENT

If you need further information, please contact:

Aarti Bowman, Investor Relations

901-523-4017

aagoorha@firsthorizon.com


FHN TABLE OF CONTENTS

 

 

 

     Page  

First Horizon National Corporation Segment Structure

     3  

Performance Highlights

     4  

Consolidated Results

  

Income Statement

  

Summary Results

     6  

Income Statement

     7  

Other Income and Other Expense

     8  

Balance Sheet

  

Period End Balance Sheet

     9  

Average Balance Sheet

     10  

Net Interest Income

     11  

Average Balance Sheet: Yields and Rates

     12  

Charges for Restructuring, Repositioning, & Efficiency Initiatives

     13  

Mortgage Servicing Rights

     14  

Business Segment Detail

  

Segment Highlights

     15  

Regional Banking

     16  

Capital Markets

     17  

Corporate

     18  

Non-Strategic

     19  

Capital Highlights

     20  

Asset Quality

  

Asset Quality: Consolidated

     21  

Asset Quality: Regional Banking and Corporate

     23  

Asset Quality: Non-Strategic

     24  

Rollforwards of Nonperforming Loans and ORE Inventory

     25  

Portfolio Metrics

     26  

Non-GAAP to GAAP Reconciliation

     27  

Glossary of Terms

     28  

Other Information

This financial supplement 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 financial supplement and in First Horizon National Corporation’s (“FHN”) most recent press release, 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 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.

Use of Non-GAAP Measures

Certain ratios are included in this financial supplement 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 ratios are relevant to understanding the capital position and results of the Company. The non-GAAP ratios presented in this financial supplement are tangible common equity to tangible assets, tangible book value per common share, tier 1 common to risk weighted assets, adjusted tangible common equity to risk weighted assets, and net interest margin using net interest income adjusted for fully taxable equivalent (“FTE”). These ratios are reported to FHN’s management and Board of Directors through various internal reports. Additionally, disclosure of 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 currently effective federal banking regulations, and other entities may use calculation methods that differ from those used by FHN. Tier 1 capital is a regulatory term and is generally defined as the sum of core capital (including common equity and instruments that can not be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations. Also a regulatory term, risk weighted assets includes total assets adjusted for credit risk and is used to determine regulatory capital ratios. Refer to the tabular reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items on page 27 of this financial supplement.

 

2


FIRST HORIZON NATIONAL CORPORATION SEGMENT STRUCTURE    LOGO

 

 

 

LOGO

 

3


FHN PERFORMANCE HIGHLIGHTS

 

 

(Third Quarter 2013 vs. Second Quarter 2013)

 

Consolidated

 

    Net loss available to common shareholders was $107.5 million, or $.45 loss per diluted share in third quarter, compared to net income of $40.8 million, or $.17 per diluted share in prior quarter

 

    Reached an agreement in principle (“AIP”) with Fannie Mae resolving certain legacy representation and warranty repurchase obligations associated with loans originated from 2000 to 2008 excluding certain loans FHN no longer services; terms are subject to Fannie Mae’s governance and regulatory approvals

 

    Signed a definitive agreement to sell substantially all remaining legacy mortgage servicing; transfers of servicing expected to occur over the next few quarters

 

    Net interest income (“NII”) decreased slightly in third quarter to $158.8 million from $160.0 million; Net interest margin (“NIM”) increased slightly to 2.97 percent from 2.96 percent in the prior quarter

 

    The decrease in NII is primarily attributable to a decline in loans to mortgage companies and run-off of the non-strategic loan portfolios coupled with the impact of placing junior liens behind first liens with performance issues on nonaccrual, partially offset by accretion of the loan valuation discount related to the second quarter purchase of Mountain National Bank (“MNB”) and the impact of day variance from prior quarter

 

    The slight increase in NIM is driven by a decline in trading assets and the loan valuation discount accretion related to the MNB purchase, which more than offset the negative impact of placing certain junior liens on nonaccrual, continued run-off of the non-strategic portfolio, and an increase in average excess cash held at the Fed

 

    Noninterest income (including securities gains) was $150.5 million in third quarter compared to $142.6 million in second quarter

 

    The increase was largely driven by an increase in fee income in third quarter within the non-strategic, corporate, and regional banking segments which more than offset a decline in income within the capital markets segment

 

    Noninterest expense was $433.6 million in third quarter compared to $227.4 million in second quarter

 

    Increase driven by an increase to the mortgage repurchase provision within the non strategic segment associated with new information received from Fannie

 

    Average loans were $15.7 billion in third quarter compared to $15.9 billion in second quarter; period-end loans decreased 5 percent to $15.4 billion

 

    Decline in the period-end loan portfolio driven by declines in the regional bank and continued run-off within the non-strategic portfolios

 

    Average core deposits were $16.0 billion in third quarter compared to $15.7 billion in second quarter; period-end decreased 4 percent to $15.7 billion

 

    Decline in period-end deposits primarily driven by lower cash balances held by public entities relative to the prior quarter

Regional Banking

 

    NII was $148.5 million in third quarter compared to $147.3 million in second quarter

 

    The increase in NII is primarily attributable to accretion of the loan valuation discount related to the MNB purchase and the impact of day variance from prior quarter, somewhat offset by a decline in loans to mortgage companies

 

    NIM increased slightly primarily driven by accretion of the loan valuation discount related to the MNB purchase, partially offset by lower loan fees relative to the prior quarter and the continuing impact of low rates

 

    Period-end loans decreased 5 percent, or $594.9 million to $12.0 billion in third quarter primarily driven by a decline in loans to mortgage companies

 

    Provision was $5.2 million in third quarter compared to $13.2 million in prior quarter

 

    Decline in provision was driven by the commercial portfolio due to aggregate improvement combined with lower net charge-offs

 

    Noninterest income increased to $63.9 million in third quarter from $61.9 million in second quarter

 

    Deposit fee income increased primarily due to seasonality in non-sufficient funds (“NSF”) fee structure

 

    Noninterest expense increased to $131.4 million in third quarter from $128.9 million in the prior quarter

 

    Increase driven by higher professional fees related to various consulting projects, increased advertising costs due to seasonality of sponsorships and product branding initiatives, and increased salary expense as a result of higher average headcount due to the MNB acquisition

Capital Markets

 

    Fixed income revenue decreased to $54.4 million in third quarter from $58.5 million in second quarter

 

    Fixed income average daily revenue (“ADR”) was $850 thousand in third quarter down 7 percent from second quarter

 

    Noninterest expenses decreased to $58.0 million in third quarter from $59.9 million in second quarter

 

    The expense decrease was due to a decrease in legal and professional fees coupled with a decline in variable compensation costs

Corporate

 

    NII was negative $10.3 million in third quarter compared to negative $10.0 million in the prior quarter

 

    Estimated effective duration of the securities portfolio was 3.8 years in third quarter compared to 3.2 years in second quarter

 

    Estimated modified duration of the securities portfolio was 4.4 years in third quarter compared to 4.0 years in prior quarter

 

    Noninterest income increased to $6.6 million in third quarter from $3.8 million in second quarter

 

    Increase resulting from higher deferred compensation driven by market conditions; changes in deferred compensation income are mirrored by changes in deferred compensation expense

 

    Noninterest expense was $21.6 million in third quarter compared to $17.1 million in the prior quarter

 

    Increase is primarily due to an increase in deferred compensation expense, acquisition-related costs, and restructuring charges, partially offset by a decline in professional fees

 

4


FHN PERFORMANCE HIGHLIGHTS (continued)

 

 

(Third Quarter 2013 vs. Second Quarter 2013)

 

Non-Strategic

 

    NII decreased to $16.9 million in third quarter from $18.6 million in second quarter due to continued run-off of the loan portfolio and the impact of placing junior liens behind first liens with performance issues on nonaccrual

 

    Provision expense increased to $4.8 million in third quarter from $1.8 million in prior quarter

 

    Noninterest income was $15.9 million in third quarter compared to $8.7 million in second quarter

 

    Increase primarily due to net hedging results driven by the mark to the terms of the servicing sale agreement signed in third quarter, partially offset by a $2.2 million negative adjustment as a result of estimated costs for obligations associated with the agreement to sell servicing

 

    Second quarter includes a gain of $1.0 million from the reversal of a previous LOCOM adjustment associated with TRUP loan payoff/sales

 

    Noninterest expense was $222.5 million in third quarter, compared to $21.5 million in the prior quarter

 

    Increase driven by a $200.0 million addition to the repurchase and foreclosure reserve in third quarter based on additional information received from Fannie

 

    Compared with previous information, the additional information encompassed a broader population of loans including expanded vintages, and estimates of future losses from loans in early stage delinquencies, modifications, and loans determined to have a higher probability of default

 

    Provision also includes estimates for exposure not covered by the AIP including loans sold to Freddie, future mortgage insurance cancellations, and loans where FHN is no longer the responsible party because of prior servicing bulk sales

Asset Quality

 

    Allowance as a percentage of loans ratio was 166 basis points in third quarter compared to162 basis points in prior quarter

 

    The allowance to loans ratio was affected by the $.8 billion decline in loan balances - largely driven by loans to mortgage companies

 

    Total reserves decreased to $255.7 million from $261.9 million in second quarter driven by a $5.1 million commercial reserve release

 

    The commercial allowance reflects continued improvement in loss rates, grade migration, and asset quality metrics

 

    The consumer allowance declined slightly driven by a reserve release in the permanent mortgage portfolio; consumer real estate reserves were relatively flat as overall improvement was offset by the continued refinement of the methodology for estimating loss content associated with junior liens behind first liens with performance issues

 

    Provision expense was $10.0 million in third quarter compared to $15.0 million in second quarter

 

    Net charge-offs (“NCO”) were $16.2 million in third quarter compared to $18.3 million in prior quarter

 

    Regional bank NCO were down $4.4 million; non-strategic NCO increased by $2.3 million which was driven by a commercial recovery recognized in second quarter

 

    Annualized net charge-offs decreased to 41 basis points of average loans from 46 basis points in prior quarter

 

    Nonperforming loans (“NPLs”) in the portfolio declined $26.1 million to $288.0 million driven by the C&I portfolio

 

    NPLs increased $2.4 million in the consumer real estate portfolio largely because of additional junior liens placed on nonaccrual during third quarter

 

    Nonperforming assets (“NPAs”), including loans held-for-sale, decreased to $482.0 million in third quarter from $506.3 million in prior quarter

 

    The decline in NPAs was largely driven by a drop in nonperforming portfolio loans as foreclosed assets were slightly lower and nonperforming loans in held for sale increased $3.2 million from second quarter

 

    Total 30+ delinquencies were $94.2 million in third quarter compared to $100.1 million in prior quarter

 

    Generally, delinquencies declined across all portfolios with the exception of regional bank consumer real estate

 

    Regional bank consumer real estate delinquencies as a percentage of period end balances increased to 66 basis points from 58 basis points in prior quarter

 

    Troubled debt restructurings (“TDRs”) were $578.4 million at the end of third quarter compared with $584.5 million in prior quarter

Taxes

 

    Third quarter includes the effect of the reduction in pre-tax earnings and the decrease in the effective tax rate from the second quarter

Capital and Liquidity

 

    Paid $0.05 per common share dividend on October 1, 2013

 

    Repurchased shares costing $49.7 million in third quarter (inclusive of the $40 million prepaid share repurchase agreement entered into in second quarter) under the $300 million share repurchase program

 

    Repurchased shares costing $262.7 million since the program’s inception in fourth quarter 2011

 

    Volume weighted average price for all share repurchases under the stock repurchase program of $9.24 per share (before $.02 per share broker commission)

 

    Paid preferred quarterly dividend of $1.6 million on October 10, 2013

 

    Capital ratios (regulatory capital ratios estimated based on period-end balances)

 

    7.82 percent for tangible common equity to tangible assets

 

    13.26 percent for Tier 1

 

    15.59 percent for Total Capital

 

    10.19 percent for Tier 1 Common

 

    10.60 percent for Leverage

 

5


FHN CONSOLIDATED SUMMARY RESULTS

Quarterly, Unaudited

 

 

                                  3Q13 Changes vs.  

(Dollars in thousands, except
per share data)

  3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Income Statement Highlights

             

Net interest income

  $ 158,838      $ 160,019      $ 161,382      $ 170,598      $ 173,465        (1 )%      (8 )% 

Noninterest income

    150,571        142,983        156,403        151,143        163,538        5     (8 )% 

Securities gains/(losses), net

    (96     (351     24        (4,700     —          73     NM   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    309,313        302,651        317,809        317,041        337,003        2     (8 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest expense

    433,556        227,408        240,540        271,361        263,169        91     65

Provision for loan losses

    10,000        15,000        15,000        15,000        40,000        (33 )%      (75 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) before income taxes

    (134,243     60,243        62,269        30,680        33,834        NM        NM   

Provision/(benefit) for income
taxes

    (31,094     15,008        17,730        (12,914     5,260        NM        NM   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) from continuing operations

    (103,149     45,235        44,539        43,594        28,574        NM        NM   

Income/(loss) from
discontinued operations, net of tax

    123        1        430        (12     108        NM        14
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss)

    (103,026     45,236        44,969        43,582        28,682        NM        NM   

Net income attributable to
noncontrolling interest

    2,875        2,843        2,813        2,901        2,875        1     *   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) attributable
to controlling interest

    (105,901 )      42,393        42,156        40,681        25,807        NM        NM   

Preferred stock dividends

    1,550        1,550        1,188        —          —                NM   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss) available to common
shareholders

  $ (107,451   $ 40,843      $ 40,968      $ 40,681      $ 25,807        NM        NM   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Common Stock Data

             

Diluted EPS from continuing
operations

  $ (0.45   $ 0.17      $ 0.17      $ 0.17      $ 0.10        NM        NM   

Diluted EPS

  $ (0.45   $ 0.17      $ 0.17      $ 0.17      $ 0.10        NM        NM   

Diluted shares (thousands)

    236,895        240,891        242,799        246,132        248,306        (2 )%      (5 )% 

Period-end shares outstanding
(thousands)

    236,328        240,555        241,225        243,598        247,134        (2 )%      (4 )% 

Cash dividends declared per share

  $ 0.05      $ 0.05      $ 0.05      $ 0.01      $ 0.01              NM   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet Highlights
(Period-End)

             

Total loans, net of unearned
income (Restricted - $.1 billion) (a) (b)

  $ 15,408,556      $ 16,197,952      $ 15,889,670      $ 16,708,582      $ 16,523,783        (5 )%      (7 )% 

Total deposits

    16,283,909        17,011,884        16,204,467        16,629,709        16,228,111        (4 )%       

Total assets
(Restricted - $.1 billion) (a) (b)

    24,193,341        25,130,941        25,166,427        25,520,140        25,739,830        (4 )%      (6 )% 

Total liabilities
(Restricted - $.1 billion) (a) (b)

    21,760,048        22,584,533        22,566,700        23,010,934        23,207,942        (4 )%      (6 )% 

Total equity (b)

    2,433,293        2,546,408        2,599,727        2,509,206        2,531,888        (4 )%      (4 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Asset Quality Highlights

             

Allowance for loan losses
(Restricted - $3.2 million) (a)

  $ 255,710      $ 261,934      $ 265,218      $ 276,963      $ 281,744        (2 )%      (9 )% 

Allowance / period-end loans

    1.66     1.62     1.67     1.66     1.71    

Net charge-offs

  $ 16,224      $ 18,284      $ 26,745      $ 19,781      $ 79,307        (11 )%      (80 )% 

Net charge-offs (annualized) /
average loans

    0.41     0.46     0.67     0.48     1.92    

Non-performing assets (NPA) (b) (c)

  $ 482,045      $ 506,265      $ 418,385      $ 419,369      $ 450,392        (5 )%      7

NPA % (c) (d)

    2.19     2.25     1.81     1.84     2.15    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Key Ratios & Other

             

Return on average assets
(annualized) (e)

    (1.69 )%      0.74     0.73     0.69     0.45    

Return on average common
equity (annualized) (f)

    (20.39 )%      7.46     7.48     7.20     4.59    

Net interest margin (g) (h)

    2.97     2.96     2.95     3.09     3.15    

Fee income to total revenue (i)

    48.66     47.19     49.22     46.98     48.53    

Efficiency ratio (j)

    NM        75.05     75.69     84.34     78.09    

Book value per common share (k)

  $ 8.64      $ 8.96      $ 9.16      $ 9.09      $ 9.05       

Tangible book value per
common share (b) (h) (k)

  $ 7.95      $ 8.28      $ 8.51      $ 8.44      $ 8.41       

Adjusted tangible common
equity to risk weighted assets (b) (h) (l)

    9.69     9.69     9.91     9.93     10.03    

Market capitalization (millions)

  $ 2,597.2      $ 2,694.2      $ 2,576.3      $ 2,414.1      $ 2,379.9       

Full time equivalent employees

    4,338        4,296        4,381        4,507        4,585       

NM - Not meaningful

 

* Amount is less than one percent.

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) Restricted balances parenthetically presented are as of September 30, 2013.
(b) 2Q13 balance has been re-presented due to purchase accounting adjustments made in 3Q13.
(c) 3Q13 and 2Q13 includes approximately $65 million and $62 million, respectively of second liens placed on nonaccrual based on information received from a third party on the performance status of non-FHN serviced first liens and approximately $21 million and $23 million, respectively of MNB foreclosed real estate.
(d) NPAs related to the loan portfolio over period-end loans plus foreclosed real estate and other assets.
(e) Calculated using net income.
(f) Calculated using net income available to common shareholders.
(g) Net interest margin is computed using total net interest income adjusted to a fully taxable equivalent (“FTE”) basis.
(h) Refer to the Non-GAAP to GAAP Reconciliation on page 27 of this financial supplement.
(i) Ratio excludes securities gains/(losses).
(j) Noninterest expense divided by total revenue excluding securities gains/(losses).
(k) 2Q13 decrease due to $40 million prepaid share repurchase agreement, shares were delivered in 3Q13.
(l) Current quarter is an estimate.

 

6


FHN CONSOLIDATED INCOME STATEMENT

Quarterly, Unaudited

 

 

                                     3Q13 Changes vs.  

(Thousands)

   3Q13     2Q13     1Q13      4Q12     3Q12      2Q13     3Q12  

Interest income

   $ 182,610     $ 183,991     $ 186,399      $ 196,199     $ 200,516        (1 )%      (9 )%

Less: interest expense

     23,772       23,972       25,017        25,601       27,051        (1 )%      (12 )% 
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Net interest income

     158,838       160,019       161,382        170,598       173,465        (1 )%      (8 )% 

Provision for loan losses (a)

     10,000       15,000       15,000        15,000       40,000        (33 )%      (75 )% 
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Net interest income after provision for loan losses

     148,838       145,019       146,382        155,598       133,465        3     12
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Noninterest income:

                

Capital markets (b) (c)

     64,283       69,265       79,163        72,483       80,773        (7 )%      (20 )% 

Mortgage banking (d)

     14,460       5,589       9,373        8,287       10,373        NM        39

Deposit transactions and cash management

     29,279       28,254       27,656        30,952       30,352        4     (4 )% 

Trust services and investment management

     6,649       6,950       6,328        5,979       6,055        (4 )%      10

Brokerage, management fees and commissions

     10,868       10,540       9,348        8,980       8,699        3     25

Insurance commissions

     733       730       600        804       946              (23 )% 

Securities gains/(losses), net (e)

     (96     (351     24        (4,700     —          73     NM   

Gain on divestiture

     115       —         —          —         —          NM        NM   

Other (f)

     24,184       21,655       23,935        23,658       26,340        12     (8 )% 
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total noninterest income

     150,475       142,632       156,427        146,443       163,538        5     (8 )% 
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted gross income after provision for loan losses

     299,313       287,651       302,809        302,041       297,003        4     1
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Noninterest expense:

                

Employee compensation, incentives, and benefits (g)

     132,213       130,500       139,184        161,813       153,970        1     (14 )% 

Repurchase and foreclosure provision

     200,000       —         —          —         —          NM        NM   

Operations services

     9,199       8,842       8,070        8,123       8,702        4     6

Occupancy

     13,147       11,785       12,822        12,363       13,059        12     1

Legal and professional fees

     12,704       14,065       11,171        11,971       12,295        (10 )%      3

FDIC premium expense

     4,631       5,037       6,011        7,299       7,532        (8 )%      (39 )% 

Computer software

     10,446       9,608       10,076        10,333       10,260        9     2

Contract employment and outsourcing

     9,241       8,581       9,039        9,052       10,187        8     (9 )% 

Equipment rentals, depreciation, and maintenance

     7,890       7,597       7,820        7,910       7,931        4     (1 )% 

Foreclosed real estate

     523       1,287       1,439        1,995       2,968        (59 )%      (82 )% 

Communications and courier

     4,517       4,531       4,437        4,613       4,722              (4 )% 

Miscellaneous loan costs

     1,349       1,163       996        924       577        16     NM   

Amortization of intangible assets

     928       928       928        979       979              (5 )% 

Other (f)

     26,768       23,484       28,547        33,986       29,987        14     (11 )% 
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total noninterest expense

     433,556       227,408       240,540        271,361       263,169        91     65
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Income/(loss) before income taxes

     (134,243     60,243       62,269        30,680       33,834        NM        NM   

Provision/(benefit) for income taxes (h)

     (31,094     15,008       17,730        (12,914     5,260        NM        NM   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Income/(loss) from continuing operations

     (103,149     45,235       44,539        43,594       28,574        NM        NM   

Income/(loss) from discontinued operations, net of tax

     123       1       430        (12     108        NM        14
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Net income/(loss)

     (103,026     45,236       44,969        43,582       28,682        NM        NM   

Net income attributable to noncontrolling interest

     2,875       2,843       2,813        2,901       2,875        1      
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Net income/(loss) attributable to controlling interest

     (105,901     42,393       42,156        40,681       25,807        NM        NM   

Preferred stock dividends

     1,550       1,550       1,188        —         —                NM   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Net income/(loss) available to common shareholders

   $ (107,451   $ 40,843     $ 40,968      $ 40,681     $ 25,807        NM        NM   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

NM - Not meaningful

 

* Amount is less than one percent.
(a) 3Q12 includes approximately $30 million associated with the implementation of regulatory guidance related to discharged bankruptcies.
(b) 3Q13 average daily revenue (“ADR”) was $850 thousand.
(c) 2Q13 and 1Q13 include a gain of $1.0 million and $2.4 million, respectively, from a LOCOM reversal associated with a TRUP loan payoff within the non-strategic segment.
(d) 3Q13 includes an increase in net hedging results driven by the mark to the terms of the agreement to sell servicing; 3Q13 also includes a $2.2 million negative adjustment made as a result of estimated costs for obligations associated with the agreement to sell servicing.
(e) 4Q12 includes a $4.7 million negative valuation adjustment related to an equity investment.
(f) Refer to the Other Income and Other Expense table on page 8 for additional information.
(g) 3Q13 includes a positive $3.5 million adjustment resulting from revisions to an employee benefit plan.
(h) 4Q12 includes $17.0 million in tax benefits related to discrete period tax items.

 

7


FHN OTHER INCOME AND OTHER EXPENSE

Quarterly, Unaudited

 

 

                                       3Q13 Changes vs.  

(Thousands)

   3Q13      2Q13     1Q13      4Q12      3Q12      2Q13     3Q12  

Other Income

                  

Bank owned life insurance

   $ 3,560      $ 3,946     $ 5,472      $ 5,081      $ 4,293        (10 )%      (17 )% 

Bankcard income

     5,303        5,299       4,882        5,766        5,298                 

ATM and interchange fees

     2,680        2,627       2,384        2,724        2,579        2     4

Other service charges

     3,707        3,503       3,086        3,167        3,263        6     14

Electronic banking fees

     1,607        1,585       1,562        1,610        1,589        1     1

Letter of credit fees

     1,171        1,196       1,499        1,192        1,072        (2 )%      9

Deferred compensation (a)

     2,160        (278     1,593        396        1,966        NM        10

Other

     3,996        3,777       3,457        3,722        6,280        6     (36 )% 
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 24,184      $ 21,655     $ 23,935      $ 23,658      $ 26,340        12     (8 )% 
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Other Expense

                  

Litigation and regulatory matters

   $ 229      $ 900     $ 5,170      $ 4,300      $ 6,760        (75 )%      (97 )% 

Advertising and public relations (b)

     5,486        4,121       3,947        5,915        4,121        33     33

Tax credit investments (c)

     3,079        2,989       2,972        4,198        5,635        3     (45 )% 

Other insurance and taxes (d)

     3,215        3,076       3,046        3,078        1,327        5     NM   

Travel and entertainment

     2,400        2,372       1,848        2,058        2,009        1     19

Customer relations

     1,204        1,255       1,278        1,348        1,027        (4 )%      17

Employee training and dues

     1,244        1,229       1,254        1,171        1,032        1     21

Supplies

     950        705       1,055        1,021        881        35     8

Bank examination costs

     819        829       828        816        816        (1 )%        

Loan insurance expense

     490        503       540        552        578        (3 )%      (15 )% 

Federal services fees

     276        282       282        27        323        (2 )%      (15 )% 

Other (e)

     7,376        5,223       6,327        9,502        5,478        41     35
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 26,768      $ 23,484     $ 28,547      $ 33,986      $ 29,987        14     (11 )% 
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

NM - Not meaningful

 

* Amount is less than one percent.
(a) Amounts driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense.
(b) 3Q13 increase driven by seasonality of sponsorships and product branding initiatives.
(c) 3Q12 includes a $1.5 million impairment of an investment.
(d) 3Q12 includes a $1.8 million positive adjustment to franchise taxes.
(e) 3Q12 includes a $1.8 million gain related to clean-up calls for first lien securitizations.

 

8


FHN CONSOLIDATED PERIOD-END BALANCE SHEET

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  

(Thousands)

   3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Assets:

              

Investment securities (a)

   $ 3,186,943     $ 3,228,379     $ 3,190,219     $ 3,061,808     $ 3,123,629       (1 )%      2

Loans held-for-sale

     371,640       385,105       390,874       401,937       410,550       (3 )%      (9 )% 

Loans, net of unearned income (Restricted - $.1 billion) (a) (b)

     15,408,556       16,197,952       15,889,670       16,708,582       16,523,783       (5 )%      (7 )% 

Federal funds sold

     52,830       52,169       33,738       34,492       12,425       1     NM   

Securities purchased under agreements to resell

     576,355       602,126       732,696       601,891       517,263       (4 )%      11

Interest-bearing cash (c)

     184,179       344,150       431,182       353,373       440,916       (46 )%      (58 )% 

Trading securities

     1,343,134       1,267,348       1,397,746       1,262,720       1,204,366       6     12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets (a)

     21,123,637       22,077,229       22,066,125       22,424,803       22,232,932       (4 )%      (5 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash and due from banks (Restricted - $1.5 million) (b)

     395,631       382,601       275,262       469,879       355,978       3     11

Capital markets receivables

     417,743       429,801       533,306       303,893       791,190       (3 )%      (47 )% 

Mortgage servicing rights, net

     116,686       113,853       109,102       114,311       120,537       2     (3 )% 

Goodwill (a) (d)

     140,479       140,479       134,242       134,242       134,242              5

Other intangible assets, net

     22,216       23,144       21,772       22,700       23,679       (4 )%      (6 )% 

Premises and equipment, net (a)

     308,779       314,764       299,740       303,273       305,346       (2 )%      1

Real estate acquired by foreclosure (a) (e)

     71,626       69,901       54,672       60,690       70,779       2     1

Allowance for loan losses (Restricted - $3.2 million) (b)

     (255,710     (261,934     (265,218     (276,963     (281,744     (2 )%      (9 )% 

Derivative assets

     215,116       235,759       274,332       292,472       334,025       (9 )%      (36 )% 

Other assets (Restricted - $1.4 million) (a) (b)

     1,637,138       1,605,344       1,663,092       1,670,840       1,652,866       2     (1 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets (Restricted - $.1 billion) (a) (b)

   $ 24,193,341     $ 25,130,941     $ 25,166,427     $ 25,520,140     $ 25,739,830       (4 )%      (6 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and Equity:

              

Deposits:

              

Savings

   $ 6,781,522     $ 6,928,447     $ 6,498,832     $ 6,705,496     $ 6,608,534       (2 )%      3

Other interest-bearing deposits

     3,494,236       3,825,235       3,740,257       3,798,313       3,468,367       (9 )%      1

Time deposits

     997,726       1,051,327       988,375       1,019,938       1,063,380       (5 )%      (6 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing core deposits

     11,273,484       11,805,009       11,227,464       11,523,747       11,140,281       (5 )%      1

Noninterest-bearing deposits

     4,434,746       4,603,954       4,454,045       4,602,472       4,569,113       (4 )%      (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total core deposits (f)

     15,708,230       16,408,963       15,681,509       16,126,219       15,709,394       (4 )%        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Certificates of deposit $100,000 and more

     575,679       602,921       522,958       503,490       518,717       (5 )%      11
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     16,283,909       17,011,884       16,204,467       16,629,709       16,228,111       (4 )%        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Federal funds purchased

     1,062,901       1,142,749       1,361,670       1,351,023       1,350,806       (7 )%      (21 )% 

Securities sold under agreements to repurchase

     427,232       433,761       488,010       555,438       443,370       (2 )%      (4 )% 

Trading liabilities

     585,969       596,869       781,306       564,429       516,970       (2 )%      13

Other short-term borrowings (g)

     303,686       446,909       186,898       441,201       856,958       (32 )%      (65 )% 

Term borrowings (Restricted - $.1 billion) (b) (h)

     1,771,288       1,800,255       2,197,864       2,226,482       2,263,238       (2 )%      (22 )% 

Capital markets payables

     388,373       368,372       461,333       296,450       574,201       5       (32 )% 

Derivative liabilities

     165,918       198,489       199,999       202,269       225,084       (16 )%      (26 )% 

Other liabilities (a)

     770,772       585,245       685,153       743,933       749,204       32     3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities (Restricted - $.1 billion) (a) (b)

     21,760,048       22,584,533       22,566,700       23,010,934       23,207,942       (4 )%      (6 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity:

              

Common stock (i)

     147,705       150,347       150,766       152,249       154,459       (2 )%      (4 )% 

Capital surplus (i) (j)

     1,413,248       1,416,563       1,461,292       1,488,463       1,517,488              (7 )% 

Undivided profits

     657,676       777,108       748,427       719,672       681,460       (15 )%      (3 )% 

Accumulated other comprehensive loss, net (k)

     (176,391     (188,665     (151,639     (146,343     (116,684     (7 )%      51

Preferred stock

     95,624       95,624       95,624       —         —                NM   

Noncontrolling interest (a) (l)

     295,431       295,431       295,257       295,165       295,165                
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity (a)

     2,433,293       2,546,408       2,599,727       2,509,206       2,531,888       (4 )%      (4 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity (a)

   $ 24,193,341     $ 25,130,941     $ 25,166,427     $ 25,520,140     $ 25,739,830       (4 )%      (6 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NM - Not meaningful

 

* Amount is less than one percent.

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) 2Q13 balance has been re-presented due to purchase accounting adjustments made in 3Q13.
(b) Restricted balances parenthetically presented are as of September 30, 2013.
(c) Includes excess balances held at Fed.
(d) 2Q13 increase driven by the MNB acquisition.
(e) 3Q13 includes $21.6 million of foreclosed assets related to government insured mortgages.
(f) 3Q13 average core deposits were $16.0 billion.
(g) 3Q12 includes increased FHLB borrowings as a result of deposit fluctuations and an increase in loans to mortgage companies.
(h) In 2Q13 $350.0 million of subordinated notes matured.
(i) Decreases relate to shares purchased under the share repurchase program.
(j) 2Q13 decrease related to $40.0 million prepaid share repurchase agreement. The shares were delivered to FHN in 3Q13.
(k) 4Q12 change primarily driven by annual benefit plan remeasurement.
(l) Consists of preferred stock of subsidiary.

 

9


FHN CONSOLIDATED AVERAGE BALANCE SHEET

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  

(Thousands)

   3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Assets:

              

Earning assets:

              

Loans, net of unearned income:

              

Commercial, financial, and industrial (C&I)

   $ 7,888,297     $ 8,121,219     $ 8,199,249     $ 8,330,961     $ 8,237,939       (3 )%      (4 )% 

Commercial real estate

     1,215,586       1,134,268       1,161,467       1,237,774       1,272,012       7     (4 )% 

Consumer real estate

     5,502,825       5,561,689       5,644,275       5,757,724       5,819,620       (1 )%      (5 )% 

Permanent mortgage

     721,554       771,253       801,000       788,428       805,580       (6 )%      (10 )% 

Credit card and other

     323,551       304,561       291,221       288,412       277,154       6     17
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans, net of unearned income
(Restricted - $.1 billion) (a) (b)

     15,651,813       15,892,990       16,097,212       16,403,299       16,412,305       (2 )%      (5 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans held-for-sale

     378,263       389,273       392,272       403,750       413,625       (3 )%      (9 )% 

Investment securities:

              

U.S. treasuries

     41,303       40,815       44,107       43,909       42,551       1     (3 )% 

U.S. government agencies

     2,900,838       2,924,012       2,818,958       2,774,175       2,894,104       (1 )%        

States and municipalities

     15,246       15,390       15,255       17,169       17,970       (1 )%      (15 )% 

Other

     224,213       218,701       216,860       222,058       220,324       3     2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment securities

     3,181,600       3,198,918       3,095,180       3,057,311       3,174,949       (1 )%        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital markets securities inventory

     1,156,262       1,310,044       1,308,969       1,250,423       1,189,852       (12 )%      (3 )% 

Mortgage banking trading securities

     15,558       16,398       17,486       18,844       20,112       (5 )%      (23 )% 

Other earning assets:

              

Federal funds sold

     28,498       26,698       24,173       24,701       28,229       7     1

Securities purchased under agreements to resell

     593,978       705,129       754,630       586,258       531,914       (16 )%      12

Interest-bearing cash (c)

     537,631       401,236       653,712       522,529       402,378       34     34
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other earning assets

     1,160,107       1,133,063       1,432,515       1,133,488       962,521       2     21
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earnings assets (Restricted - $.1 billion) (a)

     21,543,603       21,940,686       22,343,634       22,267,115       22,173,364       (2 )%      (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses (Restricted - $3.5 million) (a)

     (256,789     (260,944     (270,385     (306,583     (309,810     (2 )%      (17 )% 

Cash and due from banks (Restricted - $2.5 million) (a)

     351,972       342,053       348,581       349,002       339,098       3     4

Capital markets receivables

     93,262       113,806       121,891       114,771       168,806       (18 )%      (45 )% 

Premises and equipment, net

     308,199       302,263       299,846       303,921       306,709       2       

Derivative assets

     209,878       257,181       286,243       317,076       325,917       (18 )%      (36 )% 

Other assets (Restricted - $1.6 million) (a)

     1,942,481       1,903,727       1,948,417       1,925,664       2,085,670       2     (7 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets (Restricted - $.1 billion) (a)

   $ 24,192,606     $ 24,598,772     $ 25,078,227     $ 24,970,966     $ 25,089,754       (2 )%      (4 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities and equity:

              

Interest-bearing liabilities:

              

Interest-bearing deposits:

              

Savings

   $ 6,957,875     $ 6,516,889     $ 6,593,590     $ 6,529,453     $ 6,106,767       7     14

Other interest-bearing deposits

     3,494,211       3,645,674       3,709,988       3,469,711       3,426,864       (4 )%      2

Time deposits

     1,025,788       998,762       1,004,887       1,038,672       1,085,368       3     (5 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing core deposits

     11,477,874       11,161,325       11,308,465       11,037,836       10,618,999       3     8

Certificates of deposit $100,000 and more

     594,536       542,244       516,785       514,543       570,415       10     4

Federal funds purchased

     1,119,273       1,224,070       1,479,316       1,538,970       1,448,347       (9 )%      (23 )% 

Securities sold under agreements to repurchase

     452,940       480,960       572,666       457,493       388,208       (6 )%      17

Capital markets trading liabilities

     598,195       718,309       779,409       597,402       544,422       (17 )%      10

Other short-term borrowings (d)

     243,195       525,493       209,376       272,578       967,303       (54 )%      (75 )% 

Term borrowings (Restricted - $.1 billion) (a) (e)

     1,792,250       2,007,372       2,221,297       2,254,445       2,279,344       (11 )%      (21 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

     16,278,263       16,659,773       17,087,314       16,673,267       16,817,038       (2 )%      (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest-bearing deposits

     4,542,127       4,493,440       4,441,411       4,770,935       4,660,529       1     (3 )% 

Capital markets payables

     68,248       74,389       91,539       81,941       116,680       (8 )%      (42 )% 

Derivative liabilities

     161,611       184,192       194,892       211,598       220,309       (12 )%      (27 )% 

Other liabilities

     660,458       598,854       683,596       689,782       744,871       10     (11 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities (Restricted - $.1 billion) (a)

     21,710,707       22,010,648       22,498,752       22,427,523       22,559,427       (1 )%      (4 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity:

              

Common stock

     149,000       150,468       151,613       153,691       155,232       (1 )%      (4 )% 

Capital surplus

     1,418,259       1,430,998       1,476,797       1,507,087       1,526,772       (1 )%      (7 )% 

Undivided profits

     715,451       771,953       742,070       705,835       671,073       (7 )%      7

Accumulated other comprehensive loss, net

     (191,866     (156,178     (150,093     (118,335     (117,915     23     63

Preferred stock

     95,624       95,624       63,831       —         —                NM   

Noncontrolling interest

     295,431       295,259       295,257       295,165       295,165                
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     2,481,899       2,588,124       2,579,475       2,543,443       2,530,327       (4 )%      (2 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 24,192,606     $ 24,598,772     $ 25,078,227     $ 24,970,966     $ 25,089,754       (2 )%      (4 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NM - Not meaningful

 

* Amount is less than one percent.

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) Restricted balances parenthetically presented are quarterly averages as of September 30, 2013.
(b) Includes loans on nonaccrual status.
(c) Includes excess balances held at Fed.
(d) 3Q12 includes increased FHLB borrowings as a result of deposit fluctuations and an increase in loans to mortgage companies.
(e) In 2Q13 $350.0 million of subordinated notes matured.

 

10


FHN CONSOLIDATED NET INTEREST INCOME (a)

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  

(Thousands)

   3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Interest Income:

              

Loans, net of unearned income (b)

   $ 151,504     $ 153,070     $ 154,955     $ 163,693     $ 165,368       (1 )%      (8 )% 

Loans held-for-sale

     3,058       3,169       3,502       3,732       3,808       (4 )%      (20 )% 

Investment securities:

              

U.S. treasuries

     10       11       8       11       11       (9 )%      (9 )% 

U.S. government agencies

     18,537       18,321       18,507       19,536       21,759       1     (15 )% 

States and municipalities

     21       25       23       6       65       (16 )%      (68 )% 

Other

     2,355       2,315       2,332       2,495       2,323       2     1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment securities

     20,923       20,672       20,870       22,048       24,158       1     (13 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital markets securities inventory

     8,425       8,467       7,901       7,565       7,998              5

Mortgage banking trading securities

     403       452       489       534       569       (11 )%      (29 )% 

Other earning assets:

              

Federal funds sold

     73       66       61       64       71       11     3

Securities purchased under agreements to resell (c)

     (171     (189     44       118       94       10     NM   

Interest-bearing cash

     289       197       364       287       202       47     43
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other earning assets

     191       74       469       469       367       NM        (48 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest income

   $ 184,504     $ 185,904     $ 188,186     $ 198,041     $ 202,268       (1 )%      (9 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest Expense:

              

Interest-bearing deposits:

              

Savings

   $ 3,471     $ 3,689     $ 4,397     $ 4,617     $ 4,764       (6 )%      (27 )% 

Other interest-bearing deposits

     817       1,013       1,145       1,268       1,455       (19 )%      (44 )% 

Time deposits

     4,013       4,064       4,217       4,639       5,169       (1 )%      (22 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing core deposits

     8,301       8,766       9,759       10,524       11,388       (5 )%      (27 )% 

Certificates of deposit $100,000 and more

     1,658       1,550       1,561       1,725       1,975       7     (16 )% 

Federal funds purchased

     716       777       932       985       929       (8 )%      (23 )% 

Securities sold under agreements to repurchase

     148       134       268       211       167       10     (11 )% 

Capital markets trading liabilities

     3,632       3,354       3,196       2,536       2,556       8     42

Other short-term borrowings

     239       245       106       132       347       (2 )%      (31 )% 

Term borrowings

     9,078       9,146       9,195       9,488       9,689       (1 )%      (6 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense

     23,772       23,972       25,017       25,601       27,051       (1 )%      (12 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income - tax equivalent basis

     160,732       161,932       163,169       172,440       175,217       (1 )%      (8 )% 

Fully taxable equivalent adjustment

     (1,894     (1,913     (1,787     (1,842     (1,752     1     (8 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income

   $ 158,838     $ 160,019     $ 161,382     $ 170,598     $ 173,465       (1 )%      (8 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NM - Not meaningful

 

* Amount is less than one percent.
(a) Net interest income adjusted to a FTE basis.
(b) Includes loans on nonaccrual status.
(c) 3Q13 and 2Q13 driven by negative market rates on reverse repurchase agreements.

 

11


FHN CONSOLIDATED AVERAGE BALANCE SHEET: YIELDS AND RATES

Quarterly, Unaudited

 

 

 

     3Q13     2Q13     1Q13     4Q12     3Q12  

Assets:

          

Earning assets (a):

          

Loans, net of unearned income:

          

Commercial loans

     3.69     3.68     3.70     3.83     3.81

Retail loans

     4.06       4.12       4.16       4.18       4.30  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans, net of unearned income (b)

     3.85       3.86       3.89       3.98       4.01  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans held-for-sale

     3.23       3.26       3.57       3.70       3.68  

Investment securities:

          

U.S. treasuries

     0.09       0.11       0.07       0.10       0.11  

U.S. government agencies

     2.56       2.51       2.63       2.82       3.01  

States and municipalities

     0.55       0.65       0.59       0.13       1.44  

Other

     4.20       4.23       4.30       4.49       4.22  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment securities

     2.63       2.58       2.70       2.88       3.04  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital markets securities inventory

     2.91       2.59       2.41       2.42       2.69  

Mortgage banking trading securities

     10.36       11.02       11.19       11.34       11.31  

Other earning assets:

          

Federal funds sold

     1.01       0.99       1.02       1.02       1.00  

Securities purchased under agreements to resell (c)

     (0.11     (0.11     0.02       0.08       0.07  

Interest-bearing cash

     0.21       0.20       0.23       0.22       0.20  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other earning assets

     0.07       0.03       0.13       0.16       0.15  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest income/total earning assets

     3.41     3.40     3.40     3.55     3.64
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities:

          

Interest-bearing liabilities:

          

Interest-bearing deposits:

          

Savings

     0.20     0.23     0.27     0.28     0.31

Other interest-bearing deposits

     0.09       0.11       0.13       0.15       0.17  

Time deposits

     1.55       1.63       1.70       1.78       1.89  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing core deposits

     0.29       0.32       0.35       0.38       0.43  

Certificates of deposit $100,000 and more

     1.11       1.15       1.23       1.33       1.38  

Federal funds purchased

     0.25       0.25       0.26       0.25       0.26  

Securities sold under agreements to repurchase

     0.13       0.11       0.19       0.18       0.17  

Capital markets trading liabilities

     2.41       1.87       1.66       1.69       1.87  

Other short-term borrowings

     0.39       0.19       0.21       0.19       0.14  

Term borrowings (d)

     2.03       1.82       1.66       1.69       1.70  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Interest expense/total interest-bearing liabilities

     0.58       0.58       0.59       0.61       0.64  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest spread

     2.83     2.82     2.81     2.94     3.00

Effect of interest-free sources used to fund earning assets

     0.14       0.14       0.14       0.15       0.15  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin

     2.97     2.96     2.95     3.09     3.15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Yields are adjusted to a FTE basis. Refer to the Non-GAAP to GAAP Reconciliation on page 27 for reconciliation of net interest income (GAAP) to net interest income adjusted for impact of FTE (non-GAAP).

 

(a) Earning assets yields are expressed net of unearned income.
(b) Includes loans on nonaccrual status.
(c) 3Q13 and 2Q13 driven by negative market rates on reverse repurchase agreements.
(d) Rates are expressed net of unamortized debenture cost for term borrowings.

 

12


FHN CHARGES FOR RESTRUCTURING, REPOSITIONING, & EFFICIENCY INITIATIVES

Quarterly, Unaudited

 

 

(Thousands)

   3Q13     2Q13     1Q13     4Q12     3Q12  

By Income Statement Impact

          

Noninterest income

          

Mortgage banking (a)

   $ (2,192   $ —       $ —       $ (348   $ —    

Gain on divestiture

     115       —         —         —         —    

Noninterest expense

          

Employee compensation, incentives, and benefits (b)

     1,160       641       819       18,128       2,730  

Occupancy

     38       (60     438       180       41  

All other expense

     369       —         —         17       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loss before income taxes

     (3,644     (581     (1,257     (18,673     (2,771

Income from discontinued operations (c)

     250       —         735       —         180  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net impact resulting from restructuring, repositioning, and efficiency initiatives

   $ (3,394   $ (581   $ (522   $ (18,673   $ (2,591
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 3Q13 reflects estimated costs for obligations associated with the agreement to sell servicing; 4Q12 reflects adjustment due to contingencies associated with prior mortgage servicing sales.
(b) Includes severance associated with the Voluntary Separation Program (“VSP”) during 1Q13 and 4Q12.
(c) Includes amounts related to Msaver, First Horizon Insurance, and Highland Capital.

 

13


FHN MORTGAGE SERVICING RIGHTS

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  

(Thousands)

   3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

First Liens

              

Fair value beginning balance

   $ 111,076     $ 106,191     $ 111,314     $ 117,440     $ 126,085      

Reductions due to loan payments

     (5,989     (5,617     (5,374     (5,592     (6,050    

Reductions due to exercise of cleanup calls

     —         —         (495     —         (494    

Changes in fair value due to:

              

Changes in valuation model inputs or assumptions (a) (b)

     8,937       10,496       834       (569     (2,107    

Other changes in fair value

     (7     6       (88     35       6      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair value ending balance

   $ 114,017     $ 111,076     $ 106,191     $ 111,314     $ 117,440       3     (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Second Liens

              

Fair value beginning balance

   $ 172     $ 193     $ 196     $ 205     $ 215      

Reductions due to loan payments

     (6     (21     (48     (9     (10    

Changes in fair value due to:

              

Other changes in fair value

     —         —         45       —         —        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair value ending balance

   $ 166     $ 172     $ 193     $ 196     $ 205       (3 )%      (19 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

HELOC

              

Fair value beginning balance

   $ 2,605     $ 2,718     $ 2,801     $ 2,892     $ 2,991      

Reductions due to loan payments

     (104     (113     (125     (91     (102    

Changes in fair value due to:

              

Other changes in fair value

     2       —         42       —         3      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair value ending balance

   $ 2,503     $ 2,605     $ 2,718     $ 2,801     $ 2,892       (4 )%      (13 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Consolidated

              

Fair value beginning balance

   $ 113,853     $ 109,102     $ 114,311     $ 120,537     $ 129,291      

Reductions due to loan payments

     (6,099     (5,751     (5,547     (5,692     (6,162    

Reductions due to exercise of cleanup calls

     —         —         (495     —         (494    

Changes in fair value due to:

              

Changes in valuation model inputs or assumptions (a) (b)

     8,937       10,496       834       (569     (2,107    

Other changes in fair value

     (5     6       (1     35       9      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fair value ending balance

   $ 116,686     $ 113,853     $ 109,102     $ 114,311     $ 120,537       2     (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates.
(b) In 3Q13, FHN agreed to sell substantially all its remaining legacy mortgage servicing. FHN used the price in the definitive agreement, as adjusted for the portion of pricing that was not specific to MSR and excess interest, as a third-party pricing source in the valuation of these assets.

 

14


FHN BUSINESS SEGMENT HIGHLIGHTS

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  

(Thousands)

   3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Regional Banking

              

Net interest income

   $ 148,511     $ 147,324     $ 146,068     $ 153,889     $ 151,136       1     (2 )% 

Noninterest income

     63,884       61,900       59,144       64,074       64,235       3     (1 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     212,395       209,224       205,212       217,963       215,371       2     (1 )% 

Provision/(provision credit) for loan losses

     5,159       13,201       (2,485     (1,227     2,927       (61 )%      76

Noninterest expense

     131,438       128,948       130,337       144,031       141,576       2     (7 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     75,798       67,075       77,360       75,159       70,868       13     7

Provision for income taxes

     27,359       24,051       28,100       27,290       25,727       14     6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 48,439     $ 43,024     $ 49,260     $ 47,869     $ 45,141       13     7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital Markets

              

Net interest income

   $ 3,756     $ 4,031     $ 3,900     $ 4,248     $ 4,753       (7 )%      (21 )% 

Noninterest income

     64,115       68,199       76,612       72,432       80,817       (6 )%      (21 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     67,871       72,230       80,512       76,680       85,570       (6 )%      (21 )% 

Noninterest expense

     58,036       59,926       61,669       57,541       64,602       (3 )%      (10 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     9,835       12,304       18,843       19,139       20,968       (20 )%      (53 )% 

Provision for income taxes

     3,703       4,586       7,143       7,182       7,899       (19 )%      (53 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 6,132     $ 7,718     $ 11,700     $ 11,957     $ 13,069       (21 )%      (53 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Corporate

              

Net interest income/(expense)

   $ (10,333   $ (9,963   $ (8,621   $ (8,998   $ (6,096     (4 )%      (70 )% 

Noninterest income

     6,558       3,811       7,855       6,015       7,904       72     (17 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     (3,775     (6,152     (766     (2,983     1,808       39     NM   

Noninterest expense (a)

     21,584       17,070       17,585       36,109       21,538       26      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (25,359     (23,222     (18,351     (39,092     (19,730     (9 )%      (29 )% 

Benefit for income taxes

     (16,024     (15,201     (11,518     (37,944     (13,632     (5 )%      (18 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (9,335   $ (8,021   $ (6,833   $ (1,148   $ (6,098     (16 )%      (53 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-Strategic

              

Net interest income

   $ 16,904     $ 18,627     $ 20,035     $ 21,459     $ 23,672       (9 )%      (29 )% 

Noninterest income

     15,918       8,722       12,816       3,922       10,582       83     50
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     32,822       27,349       32,851       25,381       34,254       20     (4 )% 

Provision for loan losses

     4,841       1,799       17,485       16,227       37,073       NM        (87 )% 

Noninterest expense

     222,498       21,464       30,949       33,680       35,453       NM        NM   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) before income taxes

     (194,517     4,086       (15,583     (24,526     (38,272     NM        NM   

Provision/(benefit) for income taxes

     (46,132     1,572       (5,995     (9,442     (14,734     NM        NM   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) from continuing operations

     (148,385     2,514       (9,588     (15,084     (23,538     NM        NM   

Income/(loss) from discontinued operations, net of tax

     123       1       430       (12     108       NM        14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss)

   $ (148,262   $ 2,515     $ (9,158   $ (15,096   $ (23,430     NM        NM   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Consolidated

              

Net interest income

   $ 158,838     $ 160,019     $ 161,382     $ 170,598     $ 173,465       (1 )%      (8 )% 

Noninterest income

     150,475       142,632       156,427       146,443       163,538       5     (8 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     309,313       302,651       317,809       317,041       337,003       2     (8 )% 

Provision for loan losses

     10,000       15,000       15,000       15,000       40,000       (33 )%      (75 )% 

Noninterest expense

     433,556       227,408       240,540       271,361       263,169       91     65
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) before income taxes

     (134,243     60,243       62,269       30,680       33,834       NM        NM   

Provision/(benefit) for income taxes

     (31,094     15,008       17,730       (12,914     5,260       NM        NM   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) from continuing operations

     (103,149     45,235       44,539       43,594       28,574       NM        NM   

Income/(loss) from discontinued operations, net of tax

     123       1       430       (12     108       NM        14
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income/(loss)

   $ (103,026   $ 45,236     $ 44,969     $ 43,582     $ 28,682       NM        NM   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

NM - Not meaningful

 

* Amount is less than one percent.
(a) 4Q12 includes $18.3 million related to Restructuring, Repositioning, and Efficiency initiatives, primarily severance related costs associated with the VSP.

 

15


FHN REGIONAL BANKING

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  
     3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Income Statement (thousands)

              

Net interest income

   $ 148,511     $ 147,324     $ 146,068     $ 153,889     $ 151,136       1     (2 )% 

Provision/(provision credit) for loan losses

     5,159       13,201       (2,485     (1,227     2,927       (61 )%      76

Noninterest income:

              

NSF / Overdraft fees (a)

     11,660       10,250       10,031       13,586       13,038       14     (11 )% 

Cash management fees

     8,760       9,133       9,330       9,092       8,915       (4 )%      (2 )% 

Debit card income

     2,782       2,737       2,534       2,437       2,670       2     4

Other

     5,126       5,183       4,909       4,912       4,770       (1 )%      7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposit transactions and cash management

     28,328       27,303       26,804       30,027       29,393       4     (4 )% 

Brokerage, management fees and commissions

     10,868       10,540       9,348       8,979       8,700       3     25

Trust services and investment management

     6,665       6,966       6,343       5,995       6,071       (4 )%      10

Bankcard income

     5,090       5,051       4,691       5,556       5,029       1     1

Other service charges

     3,451       3,255       2,873       2,951       3,060       6     13

Miscellaneous revenue

     9,482       8,785       9,085       10,566       11,982       8     (21 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

     63,884       61,900       59,144       64,074       64,235       3     (1 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest expense:

              

Employee compensation, incentives, and benefits

     51,952       50,679       50,590       51,014       50,526       3     3

Other (b)

     79,486       78,269       79,747       93,017       91,050       2     (13 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest expense

     131,438       128,948       130,337       144,031       141,576       2     (7 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

   $ 75,798     $ 67,075     $ 77,360     $ 75,159     $ 70,868       13     7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Efficiency ratio (c)

     61.88     61.63     63.51     66.08     65.74    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet (millions)

              

Average loans

   $ 12,184     $ 12,225     $ 12,237     $ 12,397     $ 12,221              

Average other earning assets

     54       53       53       58       69       2     (22 )% 

Total average earning assets

     12,238       12,278       12,290       12,455       12,290              

Average core deposits

     14,484       14,624       14,560       14,445       14,295       (1 )%      1

Average other deposits

     595       542       517       515       570       10     4

Total average deposits

     15,079       15,166       15,077       14,960       14,865       (1 )%      1

Total period-end deposits

     14,862       15,562       15,225       15,142       14,783       (4 )%      1

Total period-end assets (d)

     12,908       13,495       12,844       13,754       13,246       (4 )%      (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin (e)

     4.88     4.87     4.87     4.97     4.95    

Net interest spread

     3.49       3.46       3.46       3.53       3.54      

Loan yield

     3.74       3.72       3.75       3.83       3.88      

Deposit average yield

     0.25       0.26       0.29       0.30       0.34      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Key Statistics

              

Financial center locations (f)

     182       183       171       171       173       (1 )%      5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* Amount is less than one percent.
(a) 1Q13 decline primarily attributable to seasonality in NSF fees.
(b) 1Q13 decrease largely attributable to a decline in allocated Pension expense resulting from the freeze of the pension plans on December 31, 2012.
(c) Noninterest expense divided by total revenue.
(d) 2Q13 balance has been re-presented due to purchase accounting adjustments made in 3Q13.
(e) Net interest margin is computed using total net interest income adjusted for FTE. Refer to the Non-GAAP to GAAP Reconciliation on page 27 of this supplement.
(f) 2Q13 increase of 12 branches is related to the MNB acquisition.

 

16


FHN CAPITAL MARKETS

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  
     3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Income Statement (thousands)

              

Net interest income

   $ 3,756     $ 4,031     $ 3,900     $ 4,248     $ 4,753       (7 )%      (21 )% 

Noninterest income:

              

Fixed income

     54,428       58,535       67,953       65,560       74,488       (7 )%      (27 )% 

Other

     9,687       9,664       8,659       6,872       6,329             53
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

     64,115       68,199       76,612       72,432       80,817       (6 )%      (21 )% 

Noninterest expense

     58,036       59,926       61,669       57,541       64,602       (3 )%      (10 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

   $ 9,835     $ 12,304     $ 18,843     $ 19,139     $ 20,968       (20 )%      (53 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Efficiency ratio (a)

     85.51     82.97     76.60     75.04     75.50    

Fixed income average daily revenue

   $ 850     $ 915     $ 1,133     $ 1,093     $ 1,182       (7 )%      (28 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet (millions)

              

Average trading inventory

   $ 1,156     $ 1,310     $ 1,309     $ 1,250     $ 1,190       (12 )%      (3 )% 

Average other earning assets

     604       714       770       618       576       (15 )%      5

Total average earning assets

     1,760       2,024       2,079       1,868       1,766       (13 )%       

Total period-end assets

     2,609       2,577       2,956       2,466       2,848       1     (8 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest margin (b)

     0.88     0.82     0.76     0.95     1.12    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

* Amount is less than one percent.
(a) Noninterest expense divided by total revenue.
(b) Net interest margin is computed using total net interest income adjusted for FTE. Refer to the Non-GAAP to GAAP Reconciliation on page 27 of this supplement.

 

17


FHN CORPORATE

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  
     3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Income Statement (thousands)

              

Net interest income/(expense)

   $ (10,333   $ (9,963   $ (8,621   $ (8,998   $ (6,096     (4 )%      (70 )% 

Noninterest income

     6,690       4,174       7,825       6,015       7,904       60     (15 )% 

Securities gains/(losses), net

     (132     (363     30       —         —         64     NM   

Noninterest expense (a)

     21,584       17,070       17,585       36,109       21,538       26       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

   $ (25,359   $ (23,222   $ (18,351   $ (39,092   $ (19,730     (9 )%      (29 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Balance Sheet (millions)

              

Average loans

   $ 196     $ 217     $ 226     $ 189     $ 183       (10 )%      7

Total earning assets

   $ 3,900     $ 3,802     $ 3,959     $ 3,751     $ 3,735       3     4

Net interest margin (b)

     (1.03 )%      (1.06 )%      (.92 )%      (.94 )%      (.63 )%     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NM - Not meaningful

 

* Amount is less than one percent.
(a) 4Q12 includes $18.3 million related to Restructuring, Repositioning, and Efficiency initiatives, primarily severance related costs associated with the VSP.
(b) Net interest margin is computed using total net interest income adjusted for FTE. Refer to the Non-GAAP to GAAP Reconciliation on page 27 of this supplement.

 

18


FHN NON-STRATEGIC

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  
     3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Income Statement (thousands)

              

Net interest income

   $ 16,904     $ 18,627     $ 20,035     $ 21,459     $ 23,672       (9 )%      (29 )% 

Noninterest income:

              

Mortgage warehouse valuation

     (1,441     (2,454     259       (1,850     (3,470     41     58

Service fees

     10,854       12,266       12,145       12,967       13,778       (12 )%     (21 )%

Change in MSR value - runoff

     (5,989     (5,616     (5,375     (5,592     (6,049     (7 )%     1 %

Net hedging results (a)

     12,935       1,358       1,982       2,097       4,486       NM        NM   

Miscellaneous revenue (b)

     (441     3,164       3,811       1,000       1,837       NM        NM   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

     15,918       8,718       12,822       8,622       10,582       83 %     50 %

Securities gains/(losses), net (c)

     —         4       (6     (4,700     —         NM        NM   

Noninterest expense:

              

Repurchase and foreclosure provision

     200,000       —         —         —         —         NM        NM   

Other expenses

     22,498       21,464       30,949       33,680       35,453       5 %     (37 )%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest expense

     222,498       21,464       30,949       33,680       35,453       NM        NM   

Provision for loan losses (d)

     4,841       1,799       17,485       16,227       37,073       NM        (87 )%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income/(loss) before income taxes

   $ (194,517 )    $ 4,086     $ (15,583   $ (24,526   $ (38,272     NM        NM   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Balance Sheet (millions)

              

Loans

   $ 3,272     $ 3,451     $ 3,634     $ 3,817     $ 4,008       (5 )%     (18 )%

Loans held-for-sale

     349       360       354       344       333       (3 )%     5 %

Trading securities

     16       16       17       19       20        *        (20 )%

Mortgage servicing rights

     113       108       113       118       126       5 %     (10 )%

Other assets

     237       232       257       266       286       2 %     (17 )%

Total assets

     3,987       4,167       4,375       4,564       4,773       (4 )%     (16 )%

Net interest margin (e)

     1.85     1.94     2.00     2.04     2.16    

Efficiency ratio (f)

     NM        78.49     94.19     111.96     103.50    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mortgage Warehouse - Period-end (millions)

              

Ending warehouse balance (loans held-for-sale)

   $ 346     $ 358     $ 362     $ 353     $ 339       (3 )%     2 %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Key Servicing Metrics (g)

              

Ending servicing portfolio (millions) (h)

   $ 15,033     $ 16,025     $ 17,055     $ 18,071     $ 19,149       (6 )%     (21 )%

Average servicing portfolio (millions) (h)

     15,507       16,537       17,560       18,607       19,728       (6 )%     (21 )%

Average number of loans serviced (h)

     92,054       98,972       104,874       110,175       115,987       (7 )%     (21 )%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio Product Mix (average)

              

GNMA (Ginnie)

     2     2     2     2     2    

FNMA/FHLMC (Fannie/Freddie)

     29       30       31       32       33      

Private

     61       60       60       59       59      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sub-total

     92       92       93       93       94      

FHN permanent mortgage portfolio and warehouse

     8       8       7       7       6      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100     100     100     100     100    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Portfolio Statistics

              

Servicing cost per loan (annualized) (i)

   $ 296.05     $ 282.18     $ 294.41     $ 279.08     $ 288.21      

Servicing book value (bps) (j) (k)

     83       75       69       68       68      

90+ delinquency rate, excluding foreclosures (l)

     11.09 %     11.20 %     11.20 %     10.89 %     10.61 %    

NM - Not meaningful

 

* Amount is less than one percent.
(a) 3Q13 increase driven by the mark to the terms of the agreement to sell servicing.
(b) 3Q13 includes a $2.2 million negative adjustment made as a result of estimated costs for obligations associated with the agreement to sell servicing; 2Q13 and 1Q13 include a gain of $1.0 million and $2.4 million, respectively, from a LOCOM reversal associated with a TRUP loan payoff.
(c) 4Q12 includes a $4.7 million negative valuation adjustment related to an equity investment.
(d) 3Q12 increase largely associated with the implementation of regulatory guidance related to discharged bankruptcies.
(e) Net interest margin is computed using total net interest income adjusted for FTE. Refer to the Non-GAAP to GAAP Reconciliation on page 27 of this supplement.
(f) Noninterest expense divided by total revenue excluding securities gains/(losses).
(g) Includes servicing of first liens, second liens, and HELOCs.
(h) Includes mortgage loans serviced from FHN’s legacy mortgage banking business, legacy equity lending serviced for others, and mortgage loans in portfolio and warehouse. Excludes UPB of loans transferred that did not qualify for sales treatment.
(i) Calculated based on fees charged by subservicer divided by average number of loans serviced during the quarter.
(j) Includes MSR and mortgage trading securities divided by total servicing portfolio.
(k) For purposes of this calculation, MSR excludes servicing transferred that did not qualify for sales treatment due to certain recourse provisions.
(l) Excludes delinquent second liens and HELOCs.

 

19


FHN CAPITAL HIGHLIGHTS

Quarterly, Unaudited

 

 

                                  3Q13 Changes vs.  

(Thousands)

      3Q13         2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Tier 1 capital (a) (b)

  $ 2,555,141      $ 2,712,399      $ 2,738,558      $ 2,640,776      $ 2,641,392        (6 )%      (3 )% 

Tier 2 capital (a)

    449,573        464,244        511,340        571,232        570,429        (3 )%      (21 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total capital (a) (b)

  $ 3,004,714      $ 3,176,643      $ 3,249,898      $ 3,212,008      $ 3,211,821        (5 )%      (6 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Risk weighted assets (“RWA”) (a)

  $ 19,275,100      $ 20,460,353      $ 20,231,850      $ 20,153,430      $ 20,082,979        (6 )%      (4 )% 

Tier 1 ratio (a)

    13.26     13.26     13.54     13.10     13.15    

Tier 2 ratio (a)

    2.33     2.27     2.52     2.84     2.84    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total capital ratio (a)

    15.59     15.53     16.06     15.94     15.99    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tier 1 common ratio to risk
weighted assets (a) (c)

    10.19     10.37     10.62     10.65     10.69    

Leverage ratio (a)

    10.60        11.07        10.97        10.63        10.58       

Total equity to total assets

    10.06        10.13        10.33        9.83        9.84       

Adjusted tangible common
equity to risk weighted
assets (“TCE/RWA”) (a) (c) (d) (e)

    9.69        9.69        9.91        9.93        10.03       

Tangible common
equity/tangible assets

             

(“TCE/TA”) (c) (e) (f)

    7.82        7.98        8.21        8.11        8.13       

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) Current quarter is an estimate.
(b) All quarters presented include $200 million of tier 1 qualifying trust preferred securities.
(c) Refer to the Non-GAAP to GAAP Reconciliation on page 27 of this financial supplement.
(d) See Glossary of Terms for definition of ratio.
(e) 2Q13 amount has been re-presented due to purchase accounting adjustments made in 3Q13.
(f) Calculated using period-end balances.

 

20


FHN ASSET QUALITY: CONSOLIDATED

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  

(Thousands)

   3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Allowance for Loan Losses Walk-Forward

              

Beginning reserve

   $ 261,934     $ 265,218     $ 276,963     $ 281,744     $ 321,051       (1 )%      (18 )% 

Provision (a)

     10,000       15,000       15,000       15,000       40,000       (33 )%      (75 )% 

Charge-offs (b) (c)

     (26,046     (30,272     (36,100     (31,177     (87,022     14     70

Recoveries

     9,822       11,988       9,355       11,396       7,715       (18 )%      27
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance (Restricted - $3.2 million) (d)

   $ 255,710     $ 261,934     $ 265,218     $ 276,963     $ 281,744       (2 )%      (9 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reserve for unfunded commitments

     2,956       2,976       3,439       4,145       4,572       (1 )%      (35 )% 

Total allowance for loan losses plus reserve for unfunded commitments

   $ 258,666     $ 264,910     $ 268,657     $ 281,108     $ 286,316       (2 )%      (10 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for Loan Losses

              

Regional Banking

   $ 125,440     $ 124,627     $ 120,161     $ 128,210     $ 142,060       1     (12 )% 

Non-Strategic

     130,270       137,307       145,057       148,753       139,684       (5 )%      (7 )% 

Corporate (e)

     NM       NM       NM       NM       NM       NM        NM  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total allowance for loan losses

   $ 255,710     $ 261,934     $ 265,218     $ 276,963     $ 281,744       (2 )%      (9 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nonperforming Assets

              

Regional Banking

              

Nonperforming loans (f)

   $ 118,507     $ 135,902     $ 124,824     $ 131,834     $ 152,477       (13 )%      (22 )% 

Foreclosed real estate (g) (h) (i)

     33,594       34,561       13,142       13,726       16,000       (3 )%      NM  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regional Banking (i)

   $ 152,101     $ 170,463     $ 137,966     $ 145,560     $ 168,477       (11 )%      (10 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-Strategic

              

Nonperforming loans (f)

   $ 164,534     $ 173,705     $ 129,240     $ 133,286     $ 150,635       (5 )%      9

Nonperforming loans held-for-sale before fair value adjustments (j)

     143,972       140,790       129,730       110,567       94,265       2     53

Foreclosed real estate (g)

     16,437       16,781       19,513       28,041       34,589       (2 )%      (52 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Non-Strategic

   $ 324,943     $ 331,276     $ 278,483     $ 271,894     $ 279,489       (2 )%      16
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Corporate

              

Nonperforming loans

   $ 5,001     $ 4,526     $ 1,936     $ 1,915     $ 2,426       10     NM  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets (i) (k)

   $ 482,045     $ 506,265     $ 418,385     $ 419,369     $ 450,392       (5 )%      7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Charge-Offs

              

Regional Banking

   $ 4,347     $ 8,735     $ 5,564     $ 12,623     $ 16,927       (50 )%      (74 )% 

Non-Strategic

     11,877       9,549       21,181       7,158       62,380       24     (81 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net charge-offs (b) (c)

   $ 16,224     $ 18,284     $ 26,745     $ 19,781     $ 79,307       (11 )%      (80 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Key Ratios (l)

              

NPL % (f)

     1.87     1.94     1.61     1.60     1.85    

NPA % (f) (h)

     2.19       2.25       1.81       1.84       2.15      

Net charge-offs % (b) (c)

     0.41       0.46       0.67       0.48       1.92      

Allowance / loans

     1.66       1.62       1.67       1.66       1.71      

Allowance / NPL

     0.89     0.83     1.04     1.04     0.92    

Allowance / NPA

     0.76     0.72     0.92     0.90     0.79    

Allowance / charge-offs (b) (c)

     3.97     3.57     2.45     3.52     0.89    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

              

Loans past due 90 days or more (m)

     80,923     $ 73,027     $ 87,177     $ 86,017     $ 82,953       11     (2 )% 

Guaranteed portion (m)

     41,945       38,123       40,117       36,633       35,397       10     18

Foreclosed real estate from government insured loans

     21,596       18,560       22,017       18,923       20,190       16     7

Period-end loans, net of unearned income (millions) (i)

     15,409       16,198       15,890       16,709       16,524       (5 )%      (7 )% 

Remaining unfunded commitments (millions)

     9,049       8,425       8,487       7,993       7,891       7     15

NM - Not meaningful

 

* Amount is less than one percent.
(a) 3Q12 includes approximately $30 million of loan loss provision associated with the implementation of regulatory guidance related to discharged bankruptcies.
(b) 4Q12 charge-offs reflect lower loss estimate for discharged bankruptcies based on the loan-level data obtained from new appraisals in fourth quarter.
(c) 3Q12 includes approximately $40 million of charge-offs associated with the implementation of regulatory guidance related to discharged bankruptcies.
(d) Restricted balances parenthetically presented are as of September 30, 2013.
(e) The valuation adjustment taken upon exercise of clean-up calls includes expected losses.
(f) 2Q13 NPLs increased largely due to the impact of placing second liens on nonaccrual based on 3rd party data obtained on the performance status of non-FHN serviced first liens.
(g) Excludes foreclosed real estate from government-insured mortgages.
(h) 3Q13 and 2Q13 includes approximately $21 million and $23 million respectively, of MNB foreclosed real estate.
(i) 2Q13 balance has been re-presented due to purchase accounting adjustments made in 3Q13.
(j) The average negative fair value mark was approximately 53% of unpaid principal balance as of 3Q13.
(k) 3Q13 and 2Q13 includes approximately $65 million and $62 million respectively, of second liens on nonaccrual behind first liens with performance issues.
(l) See Glossary of Terms for definitions of Consolidated Key Ratios.
(m) Includes loans held-for-sale.

 

21


FHN ASSET QUALITY: CONSOLIDATED

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  
     3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Key Portfolio Details

              

C&I

            

Period-end loans ($ millions) (a)

   $ 7,747     $ 8,368     $ 8,091     $ 8,797     $ 8,466       (7 )%      (8 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     0.11     0.13     0.17     0.22     0.30    

NPL %

     1.33       1.45       1.40       1.39       1.78      

Charge-offs % (qtr. annualized)

     0.08       0.14       0.10       0.24       0.25      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     1.18     1.12     1.06     1.09     1.26    

Allowance / charge-offs

     14.16     8.34     10.94     4.84     5.17    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial Real Estate

              

Period-end loans ($ millions) (c)

   $ 1,174     $ 1,219     $ 1,117     $ 1,168     $ 1,230       (4 )%      (5 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     0.60     0.54     0.42     0.39     0.26    

NPL %

     2.13       2.74       3.46       3.90       5.18      

Charge-offs % (qtr. annualized)

     NM        NM        0.26       0.07       1.00      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans % (d)

     0.94     1.14     1.36     1.71     2.22    

Allowance / charge-offs

     NM        NM        5.08     23.76     2.14    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer Real Estate

              

Period-end loans ($ millions)

   $ 5,458     $ 5,549     $ 5,590     $ 5,689     $ 5,736       (2 )%      (5 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     1.05     1.10     1.21     1.36     1.46    

NPL % (e)

     2.23       2.15       1.21       1.13       0.96      

Charge-offs % (qtr. annualized) (f) (g)

     0.87       0.96       1.33       0.68       4.54      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     2.21     2.18     2.35     2.27     2.02    

Allowance / charge-offs (f) (g)

     2.54     2.26     1.75     3.31     0.44    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Permanent Mortgage

              

Period-end loans ($ millions) (h)

   $ 698     $ 746     $ 793     $ 766     $ 806       (6 )%      (13 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     2.48     2.51     2.16     2.28     2.86    

NPL %

     5.30       5.14       4.37       4.27       4.22      

Charge-offs % (qtr. annualized)

     0.29       0.62       1.64       0.95       1.06      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     3.66     3.63     3.21     3.26     3.17    

Allowance / charge-offs

     12.26     5.64     1.93     3.32     2.98    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Credit Card and Other

              

Period-end loans ($ millions)

   $ 332     $ 316     $ 299     $ 289     $ 286       5     16
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     1.11     1.00     1.25     1.45     1.43    

NPL %

     0.42       0.54       0.57       0.59       0.64      

Charge-offs % (qtr. annualized)

     2.61       2.22       3.25       4.00       3.37      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     2.09     2.07     2.38     2.39     2.22    

Allowance / charge-offs

     0.82     0.97     0.75     0.60     0.68    

NM - Not meaningful

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) 2Q13 balance has been re-presented due to purchase accounting adjustments made in 3Q13.
(b) 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
(c) 2Q13 increase is related to MNB acquisition.
(d) 2Q13 decline is related to MNB loans that were acquired at fair value and that do not carry an allowance.
(e) NPL levels affected by the impact of placing second liens on nonaccrual based on 3rd party data obtained on the performance status of non-FHN serviced first liens in 2Q13.
(f) 4Q12 charge-offs reflect favorable adjustment for lower loss estimate for discharged bankruptcies based on the loan-level data obtained from new appraisals in fourth quarter.
(g) 3Q12 includes the impact of charge-offs associated with the implementation of regulatory guidance related to discharged bankruptcies.
(h) 1Q13 increase relates to exercise of cleanup calls.

 

22


FHN ASSET QUALITY: REGIONAL BANKING

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  
     3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Total Regional Banking

            

Period-end loans ($ millions) (a)

   $ 12,039     $ 12,634     $ 12,127     $ 12,819     $ 12,462       (5 )%      (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     0.35     0.31     0.36     0.38     0.45    

NPL %

     0.98       1.08       1.03       1.03       1.22      

Charge-offs % (qtr. annualized)

     0.14       0.29       0.18       0.41       0.55      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     1.04     0.99     0.99     1.00     1.14    

Allowance / charge-offs

     7.27     3.56     5.32     2.55     2.11    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Key Portfolio Details

              

C&I

              

Period-end loans ($ millions) (a)

   $ 7,254     $ 7,865     $ 7,580     $ 8,262     $ 7,929       (8 )%      (9 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     0.12     0.13     0.17     0.23     0.32    

NPL %

     0.92       0.96       0.89       0.85       0.97      

Charge-offs % (qtr. annualized)

     0.07       0.27       0.10       0.26       0.29      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     1.06     0.99     0.92     0.95     1.05    

Allowance / charge-offs

     15.09     3.81     8.71     3.87     3.71    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial Real Estate

              

Period-end loans ($ millions) (c)

   $ 1,164     $ 1,202     $ 1,098     $ 1,148     $ 1,202       (3 )%      (3 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     0.61     0.55     0.43     0.40     0.27    

NPL %

     1.87       2.38       3.01       3.46       4.56      

Charge-offs % (qtr. annualized)

     NM       NM       0.34       0.35       1.08      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans % (d)

     0.88     1.03     1.25     1.60     2.09    

Allowance / charge-offs

     NM       NM       3.59     4.29     1.89    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer Real Estate

              

Period-end loans ($ millions)

   $ 3,291     $ 3,253     $ 3,152     $ 3,121     $ 3,047       1     8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     0.66     0.58     0.68     0.65     0.75    

NPL % (e)

     0.90       0.97       0.74       0.67       0.63      

Charge-offs % (qtr. annualized) (f)

     0.14       0.31       0.07       0.51       0.78      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     0.95     0.87     0.96     0.81     0.91    

Allowance / charge-offs (f)

     6.84     2.85     13.36     1.59     1.18    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Credit Card, Permanent Mortgage, and Other

              

Period-end loans ($ millions)

   $ 330     $ 314     $ 297     $ 288     $ 284       5     16
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     1.29     1.14     1.40     1.45     1.40    

NPL %

     0.20       0.20       0.34       0.35       0.37      

Charge-offs % (qtr. annualized)

     2.52       2.03       2.94       3.42       2.92      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     2.04     2.02     2.26     2.21     2.13    

Allowance / charge-offs

     0.83     1.03     0.79     0.65     0.75    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

ASSET QUALITY: CORPORATE

              

Permanent Mortgage

              

Period-end loans ($ millions) (g)

   $ 185     $ 205     $ 229     $ 180     $ 201       (10 )%      (8 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (b)

     2.05     1.83     2.55     1.83     2.12    

NPL %

     2.70       2.21       0.84       1.06       1.21      

Charge-offs % (qtr. annualized)

     NM       NM       NM       NM       NM      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     NM       NM       NM       NM       NM      

Allowance / charge-offs

     NM       NM       NM       NM       NM      

NM - Not meaningful

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) 2Q13 balance has been re-presented due to purchase accounting adjustments made in 3Q13.
(b) 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
(c) 2Q13 increase is related to MNB acquisition.
(d) 2Q13 decline is related to MNB loans that were acquired at fair value and that do not carry an allowance.
(e) NPL levels affected by the impact of placing second liens on nonaccrual based on 3rd party data obtained on the performance status of non-FHN serviced first liens in 2Q13.
(f) 3Q12 includes the impact of charge-offs associated with the implementation of regulatory guidance related to discharged bankruptcies.
(g) 1Q13 increase relates to exercise of cleanup calls.

 

23


FHN ASSET QUALITY: NON-STRATEGIC

Quarterly, Unaudited

 

 

                                   3Q13 Changes vs.  
     3Q13     2Q13     1Q13     4Q12     3Q12     2Q13     3Q12  

Total Non-Strategic

              

Period-end loans ($ millions)

   $ 3,185     $ 3,359     $ 3,534     $ 3,710     $ 3,861       (5 )%      (18 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (a)

     1.53     1.70     1.62     1.92     2.06    

NPL % (b)

     5.17       5.17       3.66       3.59       3.90      

Charge-offs % (qtr. annualized)

     1.44       1.11       2.36       0.75       6.19      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     4.09     4.09     4.10     4.01     3.62    

Allowance / charge-offs

     2.76     3.58     1.69     5.22     0.56    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Key Portfolio Details

              

C&I

              

Period-end loans ($ millions)

   $ 493     $ 503     $ 512     $ 535     $ 537       (2 )%      (8 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (a)

     0.04     0.04     0.08     —       *      

NPL %

     7.36       9.13       8.95       9.82       13.65      

Charge-offs % (qtr. annualized)

     0.27       NM       NM       NM       NM      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     2.89     3.14     3.24     3.37     4.37    

Allowance / charge-offs

     10.61     NM       NM       NM       NM      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Commercial Real Estate

              

Period-end loans ($ millions)

   $ 10     $ 16     $ 19     $ 20     $ 28       (38 )%      (64 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (a)

     —       —       —       —       0.02    

NPL %

     32.16       29.38       29.86       29.00       32.27      

Charge-offs % (qtr. annualized)

     1.74       NM       NM       NM       NM      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     7.55     9.56     7.58     8.03     8.20    

Allowance / charge-offs

     2.93     NM       NM       NM       NM      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consumer Real Estate

              

Period-end loans ($ millions)

   $ 2,167     $ 2,297     $ 2,438     $ 2,568     $ 2,689       (6 )%      (19 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (a)

     1.64     1.84     1.89     2.23     2.26    

NPL % (b)

     4.26       3.84       1.83       1.69       1.34      

Charge-offs % (qtr. annualized) (c) (d)

     1.93       1.84       2.90       0.86       8.58      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     4.13     4.03     4.15     4.04     3.28    

Allowance / charge-offs (c) (d)

     2.08     2.12     1.39     4.51     0.37    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Permanent Mortgage

              

Period-end loans ($ millions)

   $ 499     $ 527     $ 548     $ 569     $ 588       (5 )%      (15 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (a)

     2.55     2.70     1.91     2.40     3.09    

NPL %

     6.28       6.31       5.78       5.23       5.20      

Charge-offs % (qtr. annualized)

     0.41       0.89       2.35       1.29       1.42      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     5.07     5.10     4.62     4.36     4.32    

Allowance / charge-offs

     12.14     5.58     1.93     3.30     2.96    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Consumer

              

Period-end loans ($ millions)

   $ 16     $ 16     $ 17     $ 18     $ 19       —       (16 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

30+ Delinq. % (a)

     1.63     1.99     2.26     2.82     3.59    

NPL %

     8.53       10.02       9.61       9.23       9.41      

Charge-offs % (qtr. annualized)

     2.12       3.72       5.44       9.49       6.92      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance / loans %

     3.06     2.85     2.78     3.64     2.37    

Allowance / charge-offs

     1.41     0.75     0.50     0.38     0.35    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NM - Not meaningful

 

* Amount is less than one percent.

 

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) 30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
(b) NPL levels affected by the impact of placing second liens on nonaccrual based on 3rd party data obtained on the performance status of non-FHN serviced first liens in 2Q13.
(c) 4Q12 charge-offs reflect favorable adjustment for lower loss estimate for discharged bankruptcies based on the loan-level data obtained from new appraisals in fourth quarter.
(d) 3Q12 includes the impact of charge-offs associated with the implementation of regulatory guidance related to discharged bankruptcies.

 

24


FHN ROLLFORWARDS OF NONPERFORMING LOANS AND ORE INVENTORY

Unaudited

 

 

(Millions)

   3Q13     2Q13     1Q13     4Q12     3Q12  

Commercial NPL Rollforward

          

Beginning NPLs

   $ 155     $ 152     $ 168     $ 214     $ 253  

+ Additions

     —         14       9       10       5  

- Resolutions and payments

     (25     (9     (22     (29     (18

- Net charge-offs

     (2     (2     (2     (5     (8

- Transfer to ORE

     —         —         (1     —         (2

- Upgrade to accrual

     —         —         —         (22     (16
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending NPLs

   $ 128     $ 155     $ 152     $ 168     $ 214  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Millions)

   3Q13     2Q13     1Q13     4Q12     3Q12  

ORE Inventory Rollforward (a)

          

Beginning balance

   $ 51.3     $ 32.7     $ 41.8     $ 50.6     $ 48.9  

Valuation adjustments

     (0.3     (1.9     (1.0     (1.5     (2.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted balance

     51.0       30.8       40.8       49.1       46.2  

+ New ORE

     4.5       4.0       1.2       7.5       11.9  

+ Acquired ORE (b)

     —         22.3       —         —         —    

+ Capitalized expenses

     —         —         —         0.1       0.2  

Disposals:

          

- Single transactions

     (5.5     (5.8     (9.3     (13.6     (7.7

- Bulk sales

     —         —         —         (1.3     —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 50.0     $ 51.3     $ 32.7     $ 41.8     $ 50.6  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) ORE excludes foreclosed assets related to government insured mortgages.
(b) 2Q13 balance has been re-presented due to purchase accounting adjustments made in 3Q13.

 

25


FHN: PORTFOLIO METRICS

Unaudited

 

 

C&I Portfolio: $7.7 Billion (50.3% of Total Loans) as of September 30, 2013

 

     % OS  

General Corporate, Commercial, and Business Banking Loans

     85

Loans to Mortgage Companies

     9

Trust Preferred Loans

     5

Bank Holding Company Loans

     1

Consumer Real Estate (primarily Home Equity) Portfolio: $5.5 Billion (35.4% of Total Loans)

 

Origination LTV and FICO for Portfolio as of September 30, 2013    Loan-to-Value  

(excludes whole loan insurance)

   <=60%     >60% - <=80%     >80% - 90%     >90%  

FICO score greater than or equal to 740

     11     23     17     8

FICO score 720-739

     2     4     4     2

FICO score 700-719

     1     4     4     2

FICO score 660-699

     2     4     4     3

FICO score 620-659

     —       1     1     1

FICO score less than 620

     —       1     —       1

 

Origination LTV and FICO for Portfolio - Regional Banking as of September 30, 2013    Loan-to-Value  

(excludes whole loan insurance)

   <=60%     >60% - <=80%     >80% - 90%     >90%  

FICO score greater than or equal to 740

     13     24     18     10

FICO score 720-739

     1     4     3     2

FICO score 700-719

     1     3     2     2

FICO score 660-699

     1     4     3     2

FICO score 620-659

     1     1     1     1

FICO score less than 620

     1     1     1     1

 

Origination LTV and FICO for Portfolio - Non-Strategic as of September 30, 2013    Loan-to-Value  

(excludes whole loan insurance)

   <=60%     >60% - <=80%     >80% - 90%     >90%  

FICO score greater than or equal to 740

     8     22     15     5

FICO score 720-739

     2     6     5     2

FICO score 700-719

     2     6     6     2

FICO score 660-699

     2     5     4     3

FICO score 620-659

     —   %     1     1     1

FICO score less than 620

     —       —       —       1

Consumer Real Estate Portfolio Detail:

 

            Origination Characteristics  

Vintage

   Balances ($B)      W/A Age (mo.)      CLTV     FICO     % TN     % 1st lien  

pre-2003

   $ 0.1        142        78     705       44     32

2003

   $ 0.2        123        76     724       32     38

2004

   $ 0.5        110        80     724       21     27

2005

   $ 0.7        98        81     729       17     16

2006

   $ 0.6        87        78     732       21     16

2007

   $ 0.7        75        80     737       25     19

2008

   $ 0.3        64        75     745       71     51

2009

   $ 0.2        52        72     748       87     58

2010

   $ 0.3        38        81     750       92     74

2011

   $ 0.5        26        77     760       90     86

2012

   $ 0.9        15        76     763       89     91

2013

   $ 0.5        4        77     759       88     89

Total

   $ 5.5        62        78     743 (a)      54     50
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) 743 average portfolio origination FICO; 736 weighted average portfolio FICO (refreshed).

Permanent Mortgage Portfolio: $.7 Billion (4.5% of Total Loans) (a) (b)

 

     Loan-to-Value  
     <= 60%     >60% - <=80%     >80% - 90%     >90%  

Origination LTV for Portfolio as of September 30, 2013 :

     18     71     5     6

 

(a) Documentation type: 71% full doc; 24% stated; 5% other.
(b) Product type: 71% jumbo; 12% Alt A; 17% other.

 

26


FHN NON-GAAP TO GAAP RECONCILIATION

Quarterly, Unaudited

 

 

 

(Thousands)

   3Q13     2Q13     1Q13     4Q12     3Q12  

Tangible Common Equity (Non-GAAP)

          

(A) Total equity (GAAP) (a)

   $ 2,433,293     $ 2,546,408     $ 2,599,727     $ 2,509,206     $ 2,531,888  

Less: Noncontrolling interest (a) (b)

     295,431       295,431       295,257       295,165       295,165  

Less: Preferred stock

     95,624       95,624       95,624       —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(B) Total common equity

   $ 2,042,238     $ 2,155,353     $ 2,208,846     $ 2,214,041     $ 2,236,723  

Less: Intangible assets (GAAP) (a) (c)

     162,695       163,623       156,014       156,942       157,921  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(C) Tangible common equity (Non-GAAP) (a)

   $ 1,879,543     $ 1,991,730     $ 2,052,832     $ 2,057,099     $ 2,078,802  

Less: Unrealized gains on AFS securities, net of tax

     11,153       9,439       48,591       55,250       63,923  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(D) Adjusted tangible common equity (Non-GAAP) (a) (d)

   $ 1,868,390     $ 1,982,291     $ 2,004,241     $ 2,001,849     $ 2,014,879  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible Assets (Non-GAAP)

          

(E) Total assets (GAAP) (a)

   $ 24,193,341     $ 25,130,941     $ 25,166,427     $ 25,520,140     $ 25,739,830  

Less: Intangible assets (GAAP) (a) (c)

     162,695       163,623       156,014       156,942       157,921  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(F) Tangible assets (Non-GAAP) (a)

   $ 24,030,646     $ 24,967,318     $ 25,010,413     $ 25,363,198     $ 25,581,909  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Period-end Shares Outstanding

          

(G) Period-end shares outstanding

     236,328       240,555       241,225       243,598       247,134  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tier 1 Common (Non-GAAP)

          

(H) Tier 1 capital (e) (f)

   $ 2,555,141      $ 2,712,399     $ 2,738,558     $ 2,640,776     $ 2,641,392  

Less: Noncontrolling interest - FTBNA preferred stock (b) (g)

     294,816       294,816       294,816       294,816       294,816  

Less: Preferred Stock

     95,624       95,624       95,624       —         —    

Less: Trust preferred (h)

     200,000       200,000       200,000       200,000       200,000  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(I) Tier 1 common (Non-GAAP)

   $ 1,964,701      $ 2,121,959     $ 2,148,118     $ 2,145,960     $ 2,146,576  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Risk Weighted Assets

          

(J) Risk weighted assets (e) (f)

   $ 19,275,100      $ 20,460,353     $ 20,231,850     $ 20,153,430     $ 20,082,979  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios

          

(C)/(F) Tangible common equity to tangible assets (“TCE/TA”) (Non-GAAP) (a)

     7.82     7.98     8.21     8.11     8.13

(A)/(E) Total equity to total assets (GAAP)

     10.06     10.13     10.33     9.83     9.84

(C)/(G) Tangible book value per common share (Non-GAAP) (a)

   $ 7.95     $ 8.28     $ 8.51     $ 8.44     $ 8.41  

(B)/(G) Book value per common share (GAAP)

   $ 8.64     $ 8.96     $ 9.16     $ 9.09     $ 9.05  

(I)/(J) Tier 1 common to risk weighted assets (Non-GAAP) (e)

     10.19     10.37     10.62     10.65     10.69

(H)/(E) Tier 1 capital to total assets (GAAP) (e)

     10.56     10.79     10.88     10.35     10.26

(D)/(J) Adjusted tangible common equity to risk weighted assets (“TCE/RWA”) (Non-GAAP) (a) (d) (e)

     9.69     9.69     9.91     9.93     10.03
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income adjusted for impact of fully taxable equivalent (“FTE”) (Non-GAAP)

          

Regional Banking

          

Net interest income (GAAP)

   $ 148,511     $ 147,324     $ 146,068     $ 153,889     $ 151,136  

FTE adjustment

     1,806       1,756       1,670       1,645       1,555  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income adjusted for impact of FTE (Non-GAAP)

   $ 150,317     $ 149,080     $ 147,738     $ 155,534     $ 152,691  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Capital Markets

          

Net interest income (GAAP)

   $ 3,756     $ 4,031     $ 3,900     $ 4,248     $ 4,753  

FTE adjustment

     81       149       109       186       175  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income adjusted for impact of FTE (Non-GAAP)

   $ 3,837     $ 4,180     $ 4,009     $ 4,434     $ 4,928  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Corporate

          

Net interest income (GAAP)

   $ (10,333   $ (9,963   $ (8,621   $ (8,998   $ (6,096

FTE adjustment

     7       8       8       11       22  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income adjusted for impact of FTE (Non-GAAP)

   $ (10,326   $ (9,955   $ (8,613   $ (8,987   $ (6,074
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-Strategic

          

Net interest income (GAAP)

   $ 16,904     $ 18,627     $ 20,035     $ 21,459     $ 23,672  

FTE adjustment

     —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income adjusted for impact of FTE (Non-GAAP)

   $ 16,904     $ 18,627     $ 20,035     $ 21,459     $ 23,672  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Consolidated

          

Net interest income (GAAP)

   $ 158,838     $ 160,019     $ 161,382     $ 170,598     $ 173,465  

FTE adjustment

     1,894       1,913       1,787       1,842       1,752  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income adjusted for impact of FTE (Non-GAAP)

   $ 160,732     $ 161,932     $ 163,169     $ 172,440     $ 175,217  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Certain previously reported amounts have been reclassified to agree with current presentation.

 

(a) 2Q13 balance has been re-presented due to purchase accounting adjustments made in 3Q13.
(b) Included in Total equity on the Consolidated Balance Sheet.
(c) Includes goodwill and other intangible assets, net of amortization.
(d) See Glossary of Terms for definition of ratio.
(e) Current quarter is an estimate.
(f) Defined by and calculated in conformity with bank regulations.
(g) Represents FTBNA preferred stock included in noncontrolling interest.
(h) Included in Term borrowings on the Consolidated Balance Sheet.

 

27


FHN GLOSSARY OF TERMS

 

 

 

 

Adjusted Tangible Common Equity to Risk Weighted Assets: Common equity excluding intangible assets and unrealized gains/losses on available-for-sale securities divided by risk weighted assets.

Core Businesses: Management treats regional banking, capital markets, and corporate as FHN’s core businesses. Non-strategic has significant legacy assets and operations that are being wound down.

Discharged Bankruptcies: Residential real estate secured loans where the borrower has been discharged from personal liability through bankruptcy proceedings. Such loans that have not been reaffirmed by the borrower are charged down to estimated collateral value less disposition costs (net realizable value) and are reported as nonaccruing TDRs.

Lower of Cost or Market (“LOCOM”): A method of accounting for certain assets by recording them at the lower of their historical cost or their current market value.

Restricted Real Estate Loans: Restricted loans that are assets of a consolidated variable interest entity that can be used only to settle obligations of the consolidated variable interest entity.

Troubled Debt Restructuring (“TDR”): A restructuring of debt whereby a creditor for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Such concession is granted in an attempt to protect as much of the creditor’s investment as possible by increasing the probability of repayment.

 

 

Asset Quality - Consolidated Key Ratios

 

NPL %: Ratio is nonperforming loans in the loan portfolio to total period-end loans.

NPA %: Ratio is nonperforming assets related to the loan portfolio to total period-end loans plus foreclosed real estate and other assets.

Net charge-offs %: Ratio is annualized net charge-offs to total average loans.

Allowance / loans: Ratio is allowance for loan losses to total period-end loans.

Allowance / NPL: Ratio is allowance for loan losses to nonperforming loans in the loan portfolio.

Allowance / NPA: Ratio is allowance for loan losses to nonperforming assets related to the loan portfolio.

Allowance / charge-offs: Ratio is allowance for loan losses to annualized net charge-offs.

 

 

 

28


First Horizon National Corporation
Third Quarter 2013 Earnings
October 18, 2013


2
Portions of this presentation use non-GAAP financial information. Each of those portions is so noted, and a
reconciliation
of
that
non-GAAP
information
to
comparable
GAAP
information
is
provided
in
a
footnote
or
in
the
appendix at the end of this presentation.
This presentation contains forward-looking statements, which may include guidance, involving significant risks and
uncertainties which will be identified by words such as “believe”,“expect”,“anticipate”,“intend”,“estimate”,
“should”,“is
likely”,“will”,“going
forward”
and
other
expressions
that
indicate
future
events
and
trends
and
may
be
followed by or reference cautionary statements.
A number of factors could cause actual results to differ materially
from those in the forward-looking information.
These factors are outlined in our recent earnings and other press
releases
and
in
more
detail
in
the
most
current
10-Q
and
10-K.
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.


Mortgage repurchase provision of $200mm in 3Q13
Change in GSE-related repurchase assumptions related to agreement in principle
Consolidated expenses, excluding the $200mm repurchase provision, declined 11%³
Annualized target of less than $925mm of total expenses by year end 2013
Regional Banking efficiency ratio improved 385bps to 62%
Regional Banking revenue per FTE up 1%
3
3Q13 Accomplishments
Core Businesses Produce Solid Results
Optimize
Business Mix for
Profitability &
Returns
Improve
Productivity
& Efficiency
Tier 1 ratio at 13.3%
Tier 1 Common at 10.2%
Repurchased $50mm or 4.4 million common shares in 3Q13, resulting in $263mm or 28
million total shares repurchased since October 2011
$40mm of 3Q13 repurchases were related to the 2Q13 repurchase arrangement
Core Businesses’
ROTCE at 11.3% and ROA at 0.98%¹
Regional Banking pre-tax pre-provision net revenue at $81mm, up 10%²
Regional
Banking
average
loans
flat
and
average
core
deposits
up
1%
Consolidated average loans down 5%, due to Non-Strategic run-off of 18%
FTN Financial fixed income average daily revenues at $850k
Net charge-offs declined $63mm
3Q12 included ~$40 million of NCOs associated with the implementation of regulatory
guidance related to discharged bankruptcies
Deploy Capital
In Disciplined
Manner
4
All
data
is
3Q13
compared
to
3Q12
unless
otherwise
noted.
All
non-GAAP
numbers
are
reconciled
in
the
appendix.
1
Core
Businesses
include
the
Regional
Banking,
Capital
Markets,
and
Corporate
segments.
Core
ROTCE
and
ROA
are
annualized,
non-GAAP,
and
an
average
of
quarters
4Q12-3Q13.
2
Pre-tax
pre-provision
net
revenue
is
a
non-GAAP
number.
3
3Q13
excludes
$200mm
of
repurchase
expense
and
is
a
non-GAAP
number.
4
Tier
1
and
Tier
1
Common:
current
quarter
is
estimate;
Tier
1
Common
is
a
non-GAAP
number.
5
Does
not
include
an
average
$0.004
per
share
broker
commission
paid
in
3Q13
and
an
average
$0.022
per
share
broker
commission
paid
since
October
2011.
Volume
weighted
average
price
per
share
of
$11.33
in
3Q13
and
$9.24
since
October
2011
5


4
#1 Deposit Market Share in Tennessee
First Tennessee Bank Grew Deposits Faster Than Overall Footprint
Market
FDIC Deposit Market Share
Source: FDIC.  Data as of 6.30.13.
Numbers and percentages may not add to total due to rounding.
The East Tennessee market includes the acquisition of Mountain National Bank.
Market
FHN Market Share
2013 FHN Deposits
YOY Deposit Growth
2013
2012
FHN
Overall Market
West Tennessee
$7.4B
32.3%
31.7%
East Tennessee
$6.7B
23.4%
21.4%
Middle Tennessee
$3.0B
7.8%
7.4%
Tennessee
Footprint
$17.1B
18.9%
18.0%
Market
Rank
#1
#1
#5
#1
3.8%
2.0%
6.1%
3.0%
7.0%
1.7%
5.3%
0.2%


Core Business Relative Positioning
Core Businesses Continue to Deliver Solid Results
Balance Sheet Positioned to Benefit from Rising Rates
TTM
Returns
Key TTM
Bonefish
Metrics
ROTCE
²
ROA
²
Capital ratios remain above
normalized Bonefish capital levels
NIM
²
NCO %
²
Fee Income %
Efficiency Ratio
In line with long-term Bonefish
targets
FTN Financial significant differentiator
vs peers
In line with long-term Bonefish
targets
Core efficiency ratio of 76%
A 200bps rise in rates would have
resulted in an efficiency ratio of 72%
Significant latent income embedded in
balance sheet
A 200bps rise in rates would have
improved
NII
by
~$70mm
annually
4
5
All
non-GAAP
numbers
are
reconciled
in
the
appendix.
1
Core
Businesses
include
Regional
Banking,
Capital
Markets,
and
Corporate.
All
core
data
is
non-GAAP.
Trailing
12
Months
(TTM)
is
an
average
of
quarters
4Q12-3Q13,
which
is
non-GAAP.
2
ROTCE,
ROA,
NIM,
and
NCO/Average
Loans
are
annualized.
ROTCE
is
a
non-GAAP
number.
3
Asset
weighted
last
four
quarter
average
as
of
2Q13.
Peers
defined
in
appendix.
4
All
else
equal,
a
200bps
rate
shock
results
in
~$70mm
increase
in
Core
Businesses
annual
NII
(see
slide
12),
as
Non-Strategic
is
interest
rate
neutral.
Core
estimates
are
non-GAAP.
FHN Favorable
Peers
³
FHN Unfavorable
11.3%
10.9%
0.98%
1.06%
3.21%
3.53%
0.25%
0.49%
49%
31%
76%
65%
4


FINANCIAL RESULTS
6


Net income available to common shareholders at
$(107)mm with diluted EPS of $(0.45), due to $(0.64) 
per share negative impact of mortgage repurchase
provision
Revenue increased $7mm or 2%
FTN Financial revenue down $4mm or 6% due to
market conditions
Mortgage banking noninterest income up $9mm
driven by a valuation mark related to the
servicing sale
NII relatively stable and NIM up 1bp
Expense at $434mm, including $200mm of
repurchase provision
Total provision down $5mm to $10mm
Net charge-offs down 11% to $16mm
Regional Banking NCOs of $4mm or 14bps²
Regional Banking loans flat
Loans to mortgage companies down 17%
Non-Strategic loans down 5%
7
Linked Quarter Comparison
Numbers
and
percentages
may
not
add
to
total
due
to
rounding.
All
data
is
3Q13
compared
to
2Q13
unless
otherwise
noted.
1
Core
Businesses
include
the
Regional
Banking,
Capital
Markets,
and
Corporate
segments.
Core
Businesses
Net
Income
Available
to
Common
is
a
non-GAAP
number
and
reconciled
on
slide
10.
2
Net
charge-off
%
is
annualized.
NM
Not
meaningful.
*Amount
is
less
than
1%.
3
PPNR:
Pre-tax
pre-provision
net
revenue
is
a
non-GAAP
number
and
is
reconciled
to
pre-tax
income
in
the
table.
3Q13 Consolidated Results
Consolidated Net Loss of $107 Driven by Non-Strategic Segment;
Core Businesses Net Income Available to Common of $41mm¹
2Q13
3Q12
Income Statement
($
in
millions)
Net interest income
$159
$160
$173
(1)%
(8)%
Noninterest income
$150
$143
$164
5%
(8)%
Total revenue
$309
$303
$337
2%
(8)%
Noninterest expense
$434
$227
$263
91%
65%
PPNR
3
($124)
$75
$74
NM
NM
Provision
$10
$15
$40
(33)%
(75)%
Pre-tax income
($134)
$60
$34
NM
NM
Taxes
($31)
$15
$5
NM
NM
Net income
($103)
$45
$29
NM
NM
Net income available
to common shareholders
($107)
$41
$26
NM
NM
Common Stock Data
Diluted shares
(in millions)
237
241
248
(2)%
(5)%
Diluted EPS
-$0.45
$0.17
$0.10
NM
NM
Balance Sheet
($ in billions)
Total average loans
$15.7
$15.9
$16.4
(2)%
(5)%
Total average deposits
$16.6
$16.2
$15.8
3%
5%
Efficiency
Efficiency Ratio
NM
75%
78%
2Q13
3Q12
3Q13
3Q13 vs
Total average loans down 2%


GSE-Related Mortgage Repurchase
Change in Assumptions Results in Provision Expense
2005-2008 GSE originations
Vintage
8
October 2013 FHN View
Selection
Criteria
“Historical”
selections
Seriously delinquent loans
Liquidated loans
Adds 2000-2004 originations
Expanded scope of selections
Added estimate of future losses from
other loan populations
Early stage delinquencies
Modifications
Loans determined to have higher
probability of default
June 2012 –
September 2013 FHN View


9
Mortgage Repurchase Reserve
($ in millions)
Beginning Balance
Net Realized Losses
Ending Balance
Provision
3Q13
$123
$(30)
$293
$200
3Q12
$360
$(68)
$292
$0
4Q12
$292
$(60)
$232
$0
1Q13
$232
$(48)
$184
$0
2Q13
$184
$(61)
$123
$0
Estimated Repurchase Reserve Components
Remaining Estimate for Fannie
~$80mm
Other Repurchase-Related Estimates
~$213mm
Future MI Rescissions
Bulk Servicing Sales
Remaining Freddie Estimate
Repurchase Reserve
$293mm
GSE-Related Mortgage Repurchase
Incremental Repurchase Provision Covers Change in Assumptions
1
Terms are subject to Fannie Mae governance and regulatory approvals.
Other
Incremental repurchase provision of $200mm includes:
Agreement
in
principle
with
Fannie
Exposure not included in agreement:
Future MI rescissions
Bulk servicing sales
Extrapolation to Freddie
1


3Q13 Segment Highlights
Non-Strategic Repurchase Provision Negatively Impacts Consolidated Results;
Core Businesses Continue to Provide Solid Returns
10
Core
Businesses
include
the
Regional
Banking,
Capital
Markets,
and
Corporate
segments.
1
Corporate,
Core
Businesses,
and
Consolidated
show
net
income
available
to
common,
which
reflects
$3mm
of
noncontrolling
interest
in
each
quarter
and
$1.6mm
of
preferred
stock
dividends
in
3Q13
and
2Q13.
2
Segment
EPS
impacts
are
non-GAAP
numbers
and
reconciled
in
the
table.
EPS
impacts
are
calculated
using
the
3Q13
net
income
column
divided
by
the
237mm
basic
common
shares
outstanding.
3
Revenue
and
expense
are
as
of
3Q13.
Revenue
includes
securities
gain
/
losses.
4
LQ:
Linked
quarter;
3Q13
compared
to
2Q13.
Numbers
may
not
add
to
total
due
to
rounding.
Drivers and Impacts
Revenue³
Expense
Net Income¹
LQ Change
4
$ in millions
$mm
%
3Q13
Per Share
Impact²
$212
$131
$68
$58
$(4)
$22
$33
$222
$276
$211
$309
$434
$3
-$4
$2
$5
$1
$7
$2
-$2
$5
$5
$201
$206
Regional
Banking
Capital
Markets
Corporate¹
Core
Businesses¹
Non-
Strategic
Total¹
3Q13
$48
$6
$(14)
$41
$(148)
$(107)
2Q13
$43
$8
$(12)
$38
$3
$41
3Q12
$45
$13
$(9)
$49
$(23)
$26
$0.20
$0.03
$(0.06)
$0.17
$(0.63)
$(0.45)
3Q13 repurchase provision of $200mm vs $0
in 2Q13
Fixed income ADR flat at $850k
3Q13 noninterest income of $16mm vs $9mm in
2Q13. 3Q13 increase driven by mark to the terms
of servicing sale agreement
3Q13 provision of $5mm vs provision of
$13mm in 2Q13
Decrease in expenses from lower variable
compensation & legal and professional fees
Increase primarily driven by higher
noninterest income
2%
2%
-6%
-3%
-39%
26%
0%
2%
20%
NM
2%
91%


11
Numbers/percentages may not add due to rounding.
Regional Banking Commercial Loan
Pipeline & Fundings
Regional Banking Total Average Loans & Deposits
Regional Banking Average Loans
Consumer
CRE
C&I (    Loans to Mortgage Companies)
Regional Banking Balance Sheet
Total Regional Banking Average Loans Steady; First Tennessee Gains            
#1 Deposit Share in Tennessee as Deposit Growth Outpaces the Market
First Tennessee Bank has the leading deposit market
share in Tennessee
Total average loans flat linked quarter
Commercial loans grew 1%, excluding loans to
mortgage companies
Consumer loans grew 3%
Average loans to mortgage companies down 17%
linked quarter and period end balances down 47%
Utilization rates remain low
Competitive lending environment
Commercial fundings up 5% linked quarter and 4%
year over year


12
Consolidated Balance Sheet & Net Interest Margin Trends
Net Interest Spread Slightly Improves;
Balance Sheet Positioned to Benefit from Rising Rates
450bps
Consolidated Yields and Rates
Net interest spread improved 2bps linked quarter to
356bps in 3Q13
Floating rate loans comprise 65% vs fixed rate           
loans at 35%
NII down $1mm linked quarter to $159mm
NIM up slightly linked quarter to 2.97% from 2.96%
Improvement from higher reinvestment rates in
securities portfolio and lower Capital Markets’
inventory somewhat offset by higher average cash
balances at the Fed
No expected material actions to reduce asset sensitivity
Net
Interest
Income
Sensitivity
Impact
Net Interest Income and Margin
$200mm
358
360
354
354
356
0
90
180
270
360
3Q12
4Q12
1Q13
2Q13
3Q13
Spread¹
Deposit Rate
Loan Yield
$173
$171
$161
$160
$159
3.15%
3.09%
2.95%
2.96%
2.97%
1.8%
2.4%
2.8%
$0
$50
$100
$150
3Q12
4Q12
1Q13
2Q13
3Q13
NII
NIM
-1.6%
-$11mm
+1.4%
+$9mm
+5.8%
+$37mm
+11.0%
+$71mm
-3%
0%
3%
6%
9%
12%
Long End
-50bps
Long End
+50bps
+100bps
+200bps
3.2%
3.0%
2.6%
2.2%
2.0%
Numbers
may
not
add
to
total
due
to
rounding.
1
Spread
is
loan
yield
minus
core
deposit
rate.
2
Data
is
as
of
9.30.13
and
is
non-GAAP.
Analysis
uses
FHN’s
balance
sheet
as
of
6.30.13.
Long
End
+50bps
assumes
yield
curve
spreads
widen
~50bps.
Long
end
-50bps
assumes
yield
curve
spreads
compress
~50bps.
Bps
impact
assumes
increase
in
Fed
Funds
rate.
Non-Strategic
is
interest
rate
neutral,
thus
nearly
all
the
sensitivity
impact
would
be
allocated
to
the
Core
Businesses.
2


13
Numbers/percentages
may
not
add
due
to
rounding.
1
2010Y
excludes
$190mm
of
GSE-related
mortgage
repurchase
expense
and
is
an
annual
number,
therefore
is
not
annualized;
3Q13
excludes
$200mm
of
mortgage
repurchase
expense.
These
are
non-GAAP
numbers
and
a
reconciliation
is
provided
in
the
appendix.
Annualized noninterest expense declined 19% from 2010 from broad-based improvement in most categories¹
Annualized consolidated expenses, excluding mortgage provision, down 11% year-over-year¹
Regional Banking efficiency ratio improved 385bps from 3Q12 to 62%
Goal of less than $925mm of annualized run-rate of consolidated expenses by year end 2013
Improving Productivity and Efficiency
FHN Continues to Deliver on Efficiency Goals in Core Businesses
Annualized Noninterest Expense¹


14
Non-Performing Assets
3Q13 net charge-offs of $16mm compared to         
$18mm in 2Q13
Regional Banking NCOs down $4mm or 50%
NCOs at 0.14% of average loans³
Non-Strategic NCOs up $2mm or 24%
NCOs at 1.44% of average loans³
Reserves and Net Charge-Offs
Numbers
may
not
add
due
to
rounding.
All
data
is
3Q13
compared
to
3Q12
unless
otherwise
noted.
1
4Q12
charge-offs
included
a
favorable
adjustment
for
lower
loss
estimate
for
discharged
bankruptcies.
2
3Q12
had
$40mm
of
charge-offs
related
to
discharged
bankruptcies
per
regulatory
guidance.
3
Net
charge-off
%
is
annualized.
NPAs at $482mm
ORE at $50mm in 3Q13 vs $51mm in 3Q12
NPL levels at $432mm
~$65mm of 3Q13 NPLs are related to compliance
with regulatory guidance associated with the liens
junior to first liens with performance issues
3Q13 NPLs include $144mm of held for sale loans that
carry an average negative fair value mark of ~53%
Asset Quality Trends
Continued Decline in Net Charge-Offs


15
Trailing Twelve Months¹
Consolidated
Core Businesses
4
Long-Term Targets
ROTCE²
0.41%
11.33%
15.00 –
20.00%
ROA²
0.12%
0.98%
1.25 -
1.45%
NIM²
2.99%
3.21%
3.50 -
4.00%
Tier 1 Common³
10.46%
8.00 –
9.00%
NCO / Average Loans²
0.51%
0.25%
0.30 -
0.70%
Fee Income / Revenue
48%
49%
40 -
50%
Efficiency Ratio
94%
77%
60 -
65%
Equity / Assets
Return on Assets
1.25% - 1.45%
Risk Adjusted Margin
Return on Tangible
Common Equity
15% - 20%
Total Assets
Earning Assets
Pre-tax Income
Tax Rate
Efficiency Ratio
60% - 65%
Annualized Net Charge-Offs
0.30% - 0.70%
Net Interest Margin
3.50% - 4.00%
Tier 1 Common
8% - 9%
% Fee Income
40% - 50%
Building Long-Term Earnings Power: Bonefish Targets
Focused on Growing Our Company Selectively and Profitably While Positioning
Our Balance Sheet for Sustainable, Higher Returns in the Long Term
All
non-GAAP
numbers
are
reconciled
in
the
appendix.
1
Average
of
quarters
4Q12-3Q13
for
each
metric,which
is
a
non-GAAP
number.
2
ROTCE,
ROA,
NIM,
and
NCO
/
Average
Loans
are
annualized.
ROTCE
is
a
non-GAAP
number.                              
3
Tier
1
Common:
current
quarter
is
an
estimate
and
a
non-GAAP
number.
4
Core
Businesses
include
Regional
Banking,
Capital
Markets,
and
Corporate
segment.
Core
data
is
non-GAAP.


16
Building a Foundation for Long-Term Earnings Power
FHN is successfully executing on key priorities:
1)
Building foundation for strong balance sheet
2)
Reducing risk profile
3)
Optimizing business mix
4)
Maintaining asset sensitivity for long-term
5)
Expanding and deepening customer relationships
6)
Improving productivity and efficiency
7)
Smartly managing capital
8)
Controlling what we can control in challenging environment
Successfully Executing on Key Priorities
FHN Is Well Positioned For Long-Term Earnings Power


APPENDIX
17


18
3Q13 Credit Quality Summary by Portfolio
Numbers
may
not
add
to
total
due
to
rounding.
Data
as
of
3Q13.
NM:
Not
meaningful.
1
Creditcard,
Permanent
Mortgage,
and
Other.
2
Credit
card,OTC,
and
Other
Consumer.
3
Net
charge-offs
are
annualized.
4
Exercised
clean-up
calls
on
jumbo
securitizations
in
1Q13,
3Q12,
2Q11,
and
4Q10,
which
are
now
on
balance
sheet
in
the
Corporate
segment.
($ in millions)
CRE
HE &
HELOC
Other
1
Total
Permanent
Mortgage
Commercial
(C&I & Other)
CRE
HE &
HELOC
Permanent
Mortgage
Other
2
Total
Period End Loans
$7,254
$1,164
$3,291
$330
$12,039
$185
$493
$10
$2,167
$499
$16
$15,409
30+ Delinquency
0.12%
0.61%
0.66%
1.29%
0.35%
2.05%
0.04%
0.00%
1.64%
2.55%
1.63%
0.61%
Dollars
$9
$7
$22
$4
$42
$4
$0
$0
$36
$13
$0
$94
NPL %
0.92%
1.87%
0.90%
0.20%
0.98%
2.70%
7.36%
32.16%
4.26%
6.28%
8.53%
1.87%
Dollars
$66
$22
$30
$1
$119
$5
$36
$3
$92
$31
$1
$288
Net Charge-offs
3
%
0.07%
NM
0.14%
2.52%
0.14%
NM
0.27%
1.74%
1.93%
0.41%
2.12%
0.41%
Dollars
$1
$0
$1
$2
$4
NM
$0
$0
$11
$1
$0
$16
Allowance
$77
$10
$31
$7
$125
NM
$14
$1
$89
$25
$0
$256
Allowance / Loans %
1.06%
0.88%
0.95%
2.04%
1.04%
NM
2.89%
7.55%
4.13%
5.07%
3.06%
1.66%
Allowance / Charge-offs
15.09x
NM
6.84x
0.83x
7.27x
NM
10.61x
2.93x
2.08x
12.14x
1.41x
3.97x
Regional Banking
Non-Strategic
Corporate
4
Commercial
(C&I & Other)


19
C&I and Commercial Real Estate Portfolio Detail
Data
as
of
3Q13.
Numbers
may
not
add
to
total
due
to
rounding.
1
Net
charge-off
ratios
are
annualized.
C&I: Loans to Mortgage Companies
$7.7B portfolio, diversified by industry, managed
primarily in Regional Banking
Net charge-offs at $2mm down 42% linked quarter
C&I consolidated reserves of 1.18% at 9/30/13
C&I Overview
Commercial Real Estate: Asset Quality
$1.2B portfolio, which includes Income CRE and
Residential CRE
CRE consolidated reserves of 0.94% at 9/30/13
Commercial Real Estate Overview


20
Home Equity: Performance and Characteristics
Portfolio Characteristics
Geographic Distribution
30+ Delinquency: Key Drivers
Data as of 3Q13.
Numbers and percentages may not add due to rounding.
FICO Score-Origination
Lien Position
Channel
57%
% of portfolio
12%
11%
12%
8%
89%
11%
% of portfolio
50%
50%
% of portfolio
First
Second
Total
Balance
$2.7B
$2.7B
$5.5B
Original FICO
751
735
743
Refreshed FICO
750
722
735
Original CLTV
75%
81%
78%
Full Doc
90%
74%
82%
Owner Occupied
91%
92%
92%
HELOCs
$0.7B
$2.2B
$2.9B
Weighted Average
HELOC Utilization
48%
58%
56%


21
Consumer Real Estate Portfolio
30+ Delinquency
Net Charge-Offs
Non-Strategic Portfolio Run-Off
1
Source:
McDash
industry
data
as
of
July
2013.
2
3Q12
includes
$38mm
of
charge-offs
related
to
regulatory
guidance
on
discharged
bankruptcies.
4Q12
charge-offs
include
a
favorable
adjustment
for
lower
loss
estimate
for
discharged
bankruptcies
based
on
loan-level
data
obtained
from
new
appraisals
in
4Q12.


22
Agency & Non-Agency: Mortgage Origination & Loan Data
Agency and Pipeline
~$70B of Agency originations from 2005 to 2008
Received ~$2.5B¹
of Agency-related repurchase requests to date or
3.6% of originations
Represent 89% of all active repurchase/make whole requests in
pipeline at 9/30/13²
Pipeline of requests at $311mm in 3Q13, up 32% from $235mm in
2Q13
$169mm of Agency-related repurchase claims
$23mm of mortgage insurer-related cancellations
$22mm of non-Agency whole loan-related claims
$97mm of other non-repurchase requests
Data
as
of
3Q13.
1
Requests
include
MI
cancellation
notices.
2
Agencies
account
for
89%
of
all
actual
repurchase/make-whole
requests
in
the
pipeline
as
of
3Q13
and
87%
of
the
active
pipeline
inclusive
of
PMI
cancellation
notices
and
all
other
claims.
3
FHA
insurance
claims
made
after
3/31/12
may
be
added
to
investigation
Other Whole Loan Sales and Non-Agency
Represent 11% of all active repurchase/make whole requests in
3Q13 pipeline
Some non-Agency FHN loans were bundled with other companies’
loans and securitized by the purchasers
A trustee for a bundler has commenced a legal action seeking
repurchase of FHN loans
Certain purchasers have requested indemnity related to FHN
loans included in their securitizations
Loan file review process regarding certain bundled FHN loans
has been initiated
Non-Agency HUD/FHA Investigation
HUD and the US DOJ are investigating FHA insurance claims on
insured loans originated by FHN; initial period covers 1/1/06
through 3/31/12³
During that period FHN originated ~50,000 loans with original
UPB of ~$8.6B
Approximately ~48,000 of those originations occurred prior to
9/1/08
FHN had an initial meeting with HUD and DOJ in 2Q13
HUD has reviewed a small sample of loans from the covered period,
and its investigation remains incomplete; FHN has commenced its
own review
HUD and DOJ have made no demands but could seek up to treble
and special damages under the False Claims Act and other laws
FHN does not have the ability now to estimate a reserve or a range
of reasonably possible losses
Fannie
Freddie
Total GSE Loans Sold
Ginnie Loans Sold
Total Agency Loans Sold
Total Demands (Request Rate)
Resolved
Cumulative Average Rescission Rate
Average Loss Severity
Realized Losses through 3Q13
Remaining Reserve at 9/30/13
Cumulative Total Losses plus Reserve
GSE Aggregate Expected Loss Ratio
Originations: 2005-2008
Amount
$39.6B
$18.0B
$57.6B
$11.9B
$69.5B
$2.5B / 3.6%
$2.3B
45 -
55%
50 -
60%
~$657mm
$293mm
~$950mm
1.6%


23
Private Label Securitization Exposure Manageable
All
data
refers
to
the
active
2005-2007
FHN
branded
private
securitizations,
unless
otherwise
noted.
Data
as
of
August
2013
with
September
remits.
Source
for
all
data,
except
where
noted,
is
LoanPerformance,
CPRCDR,
Intex,
PolyPaths,
Bloomberg
with
company
analysis.
Cohort
(Industry)
=
Loans
of
similar
type/vintage
relevant
reference
group.
1
Industry
source:
KDS
Global.
Includes
all
deals
from
2005-2007.
2
Performance
determined
by
comparing
60D+
and
Cumulative
Loss
ratios
at
the
deal
level.
60D+
balances
are
current
UPB.
Cumulative
loss
balances
are
original
UPB.
Originated and securitized $27B of First Horizon
branded private label mortgages from 2005-2007
If any private label securitization (PLS) losses occur,
they should be significantly less than the GSE
experience
More limited reps and warranties
Statutes of limitations
100% of active PLS are older than 5 years, with
99% older than 6 years
Strong relative performance vs industry cohorts
Smaller average securitization size
Origination Mix
FHN
Industry¹
Securitization Performance²
Repurchase Risk Differs For Private Label vs GSEs
Most private label reps and warranties are not as
comprehensive as GSE whole-loan reps and warranties
More difficult for most non-agency investors to    
access loan files
Generally requires a coordinated investor effort to
compel trustees to investigate and pursue   
repurchase claims
Investor interests are not necessarily aligned
Trustee may initiate loan review and repurchase
process on its own
60 Day+ Delinquencies
Cumulative Loss
Outperforming Industry Cohort
Underperforming Industry Cohort
Average
Deal Size:
$342mm
$891mm
Key Points
No subprime securitizations


FHFA Litigation Securitizations
FHFA Litigation Certificate Breakdown
Numbers
and
percentages
may
not
add
to
total
due
to
rounding.
Data
source:
September
2013
Trustee
Reports
and
the
FHFA
lawsuit
filed
on
9/2/11.                             
1
In
April
2007,
the
GSEs
purchased
the
remaining
$161mm
of
UPB
in
the
FHAMS
2005-AA12
IIA1
tranche,
as
reported
in
the
FHFA
lawsuit.
This
tranche
had
an
origination
balance
of
$213mm.
2
60D+
Delinquent
defined
as
a
delinquency
status
of
60
days
or
more
and
also
bankruptcies,
foreclosures
and
REO
in
such
status
for
60
days
or
more.
24
$1.0B
$874mm*
*The original balance related to the FHFA lawsuit is $874mm, plus an additional $9mm of cost over par, totaling $883mm
($ in millions)
Alt-A Deal
FHFA-Related
Tranche
Original
UPB
Paid
Off
Current
UPB
Performing
UPB
60D+
Delinquent
Cumulative
Loss
FHAMS 2005-AA9     
IIA1
$214
$125
$78
$70
$8
$11
FHAMS 2005-AA10    
IA1
$140
$83
$50
$44
$6
$7
FHAMS 2005-AA11    
IA1
$129
$70
$47
$42
$5
$11
FHAMS 2005-AA12
¹
IIA1
$161
$76
$71
$60
$11
$14
FHAMS 2006-AA1     
IA1
$230
$142
$70
$62
$8
$19
FHFA Total
$874
$496
$316
$279
$38
$62


($ in millions)
Deal
FHASI 2005-AR5¹
(Schwab)
Senior
$30.0
$19.1
$10.9
$10.1
$0.9
$0.0
FHASI 2007-AR2¹
(Schwab)
Senior
$50.0
$31.3
$16.7
$13.9
$2.8
$2.0
FHASI 2006-3
(Western-Southern)
Junior
$9.9
$0.5
$2.8
$2.6
$0.2
$6.6
FHASI 2007-5
(Western-Southern)
Junior
$7.1
$0.2
$0.0
$0.0
$0.0
$6.9
FHAMS 2007-FA4
(Western-Southern)
Senior
$5.1
$0.2
$0.0
$0.0
$0.0
$4.8
FHAMS 2006-FA6
(FDIC Alabama)
Senior
$11.1
$2.5
$8.0
$6.0
$2.0
$0.6
FHAMS 2006-FA6
(FDIC Alabama)
Senior
$15.2
$4.0
$10.3
$8.3
$2.0
$0.9
FHAMS 2006-FA7
(FDIC Alabama)
Senior
$20.7
$5.3
$13.5
$10.8
$2.8
$1.8
FHAMS 2007-FA4¹
(FDIC Alabama)
Senior
$14.4
$2.8
$10.2
$7.6
$2.5
$1.4
FHAMS 2007-FA1
(FDIC New York)
Senior
$44.5
$11.4
$28.7
$21.9
$6.8
$4.4
FHAMS 2007-FA2
(FDIC New York)
Senior
$34.9
$10.4
$21.2
$16.1
$5.1
$3.3
FHAMS 2005-FA8
(FHLB Indemnification)
Senior
$100.0
$74.3
$25.7
$21.9
$3.8
$0.0
FHAMS 2007-FA3
(MetLife Indemnification)
Senior
$103.0
$56.3
$40.6
$31.7
$8.9
$6.1
FHAMS 2005-FA10²
(Royal Park Indemnification)
Senior
$100.0
$60.2
$37.2
$31.3
$5.9
$2.6
FHAMS 2006-FA2¹
(Royal Park Indemnification)
Senior
$30.0
$22.4
$6.6
$5.3
$1.3
$1.0
Total
$575.7
$300.9
$232.5
$187.4
$45.0
$42.4
Cumulative
Loss
Certificate
Original
UPB
Paid
Off
Current
UPB
Performing
UPB
60D+
Delinquent
Non-FHFA Litigation Securitizations
Non-FHFA Litigation Certificate Breakdown
25
$576mm
Numbers
&
percentagesmay
not
add
to
total
due
to
rounding.
Data
source:
September
2013
Trustee
Reports.
FHN
settled
an
outstanding
complaint
with
FHLB
Chicago
2Q13.
1
The
complainants
only
purchased
a
portion
of
these
tranches.Original
UPB
estimated
based
on
the
purchase
price
stated
in
the
complaints.
All
other
metrics
prorated
based
on
the
ratio
of
purchase
price
to
the
total
original
UPB
of
the
entire
tranche.
2
Royal
Park
is
asking
for
indemnification
on
$100mm
of
the
$190mm
tranche
as
stated
in
the
indemnification
request.
3
60D+
Delinquent
defined
as
a
delinquency
status
of
60
days
or
more
and
also
bankruptcies,
foreclosures
and
REO
in
such
status
for
60
days
or
more.


Reconciliation to GAAP Financials
Slides in this presentation use non-GAAP information of net income, assets, net interest income, charge-offs, revenue,
noninterest income and expense, and various ratios using one or more of those measures. That information is not presented
according to generally accepted accounting principles (GAAP) & is reconciled to GAAP information below.
26
Numbers may not add to total due to rounding.
1
ROA and Net Charge-offs / Average loans are annualized.
2
Average of quarters 4Q12-3Q13.
Return
on Assets¹
Net Interest
Margin
Net Charge-Offs/
Average Loans
1
Fee Income /
Total Revenue
Efficiency
Ratio
Regional Banking (GAAP)
1.49%
4.88%
0.14%
30%
62%
Capital Markets (GAAP)
1.15%
0.88%
0.00%
94%
86%
Corporate (GAAP)
-0.72%
-1.03%
NM
NM
NM
Core Businesses (Non-GAAP)
0.89%
3.20%
0.14%
49%
76%
Non-Strategic (GAAP)
-14.75%
1.85%
1.44%
48%
NM
Consolidated (GAAP)
-1.69%
2.97%
0.41%
49%
NM
Regional Banking (GAAP)
1.33%
4.87%
0.29%
30%
62%
Capital Markets (GAAP)
1.28%
0.82%
0.00%
94%
83%
Corporate (GAAP)
-0.63%
-1.06%
NM
NM
NM
Core Businesses (Non-GAAP)
0.84%
3.17%
0.28%
49%
75%
Non-Strategic (GAAP)
0.24%
1.94%
1.11%
32%
78%
Consolidated (GAAP)
0.74%
2.96%
0.46%
47%
75%
Regional Banking (GAAP)
1.54%
4.87%
0.18%
29%
64%
Capital Markets (GAAP)
1.90%
0.76%
0.00%
95%
77%
Corporate (GAAP)
-0.53%
-0.92%
NM
NM
NM
Core Businesses (Non-GAAP)
1.06%
3.15%
0.18%
50%
74%
Non-Strategic (GAAP)
-0.85%
2.00%
2.36%
39%
94%
Consolidated (GAAP)
0.73%
2.95%
0.67%
49%
76%
Regional Banking (GAAP)
1.45%
4.97%
0.41%
29%
66%
Capital Markets (GAAP)
2.08%
0.95%
0.00%
94%
75%
Corporate (GAAP)
-0.09%
-0.94%
NM
NM
NM
Core Businesses (Non-GAAP)
1.14%
3.33%
0.40%
49%
81%
Non-Strategic (GAAP)
-1.32%
2.04%
0.75%
29%
112%
Consolidated (GAAP)
0.69%
3.09%
0.48%
47%
84%
Regional Banking (GAAP)
1.45%
4.90%
0.25%
29%
63%
Capital Markets (GAAP)
1.60%
0.85%
0.00%
95%
80%
Corporate (GAAP)
-0.49%
-0.99%
NM
NM
NM
Core Businesses (Non-GAAP)
0.98%
3.21%
0.25%
49%
77%
Non-Strategic (GAAP)
-4.17%
1.96%
1.42%
37%
NM
Consolidated (GAAP)
0.12%
2.99%
0.51%
48%
94%


Reconciliation to GAAP Financials
27
Slides in this presentation use non-GAAP information of risk weighted assets, tangible common equity, net income, non-controlling
interest,
average
common
equity,
intangibles,
and
various
ratios
using
those
measures.
That
information
is
not
presented
according
to
generally
accepted
accounting
principles
(GAAP)
and
is
reconciled
to
GAAP
information
below.
($ in millions)
3Q13
2Q13
1Q13
4Q12
Average
4
Core Businesses Return On Tangible Common Equity
$19,275
$20,460
$20,232
$20,153
$3,547
$3,705
$3,891
$4,018
$15,728
$16,755
$16,341
$16,135
$1,923
$2,038
$2,064
$2,091
$361
$384
$413
$428
$1,561
$1,653
$1,651
$1,663
($107)
$41
$41
$41
$41
$38
$50
$56
-22.17%
8.04%
8.05%
7.74%
0.41%
10.37%
9.30%
12.32%
13.34%
11.33%
($9)
($8)
($7)
($1)
$3
$3
$3
$3
$2
$2
$1
$0
($14)
($12)
($11)
($4)
$48
$43
$49
$48
$6
$8
$12
$12
$41
$38
$50
$56
$2,091
$2,197
$2,220
$20,248
$168
$160
$156
$157
$1,923
$2,038
$2,064
$2,091
($107)
$41
$41
$41
-22.17%
8.04%
8.05%
7.74%
0.41%
Numbers
may
not
add
to
total
due
to
rounding.
1
Estimated
by
applying
risk
based
capital
regulations
to
period
end
assets.
2
Core
Businesses
include
the
Regional
Banking,
Capital
Markets,
and
Corporate
segments.
3
Applies
the
quarterly
consolidated
Tier
1
Common
ratio
to
the
Non-Strategic
risk
weighted
assets.
The
3Q13
Tier
1
Common
ratio
is
an
estimate.
4
Average
of
quarters
4Q12-3Q13.
Total FHN Risk Weighted Assets Estimate
1
(Regulatory GAAP)
Less: Non-Strategic Risk Weighted Assets Estimate
1
(Regulatory Non-GAAP)
Total Core Businesses
2
Risk Weighted Assets Estimate (Non-GAAP)
Total FHN Average Tangible Common Equity (Non-GAAP)
Less: Non-Strategic Allocated Tangible Common Equity at the Tier 1 Common Ratio %
3
(Non-GAAP)
Total Core Businesses
2
Average Tangible Common Equity (Non-GAAP)
FHN Net Income Available to Common (GAAP)
Core Businesses
2
Net Income Available to Common (Non-GAAP)
FHN Annualized Return on Tangible Common Equity (Non-GAAP)
Core Businesses
2
Annualized Return on Tangible Common Equity (Non-GAAP)
Core Businesses Net Income Available to Common
Corporate Net Income (GAAP)
Less: Corporate Non-Controlling Interest (GAAP)
Less: Corporate Preferred Stock Dividends (GAAP)
Corporate Net Income Available to Common (Non-GAAP)
Regional Banking Net Income (GAAP)
Capital Markets Net Income (GAAP)
Core Businesses
2
Net Income Available to Common (Non-GAAP)
Return on Tangible Common Equity
Average Common Equity (GAAP)
Intangibles (GAAP)
Average Tangible Common Equity (Non-GAAP)
FHN Net Income Available to Common (GAAP)
FHN Annualized Return on Tangible Common Equity (Non-GAAP)


Reconciliation to GAAP Financials
Slides in this presentation use non-GAAP information of net interest income, FTE adjustments, revenue, noninterest expense,
FTEs, and various ratios using one or more of those measures. That information is not presented according to generally accepted
accounting
principles
(GAAP)
&
is
reconciled
to
GAAP
information
below.
28
Numbers may not add to total due to rounding.
1
Core Businesses include the Regional Banking, Capital Markets, and Corporate segments.
($ in millions)
3Q13
2Q13
1Q13
4Q12
3Q12
Net Interest Margin
Regional Banking Net interest income (GAAP)
$149
$147
$146
$154
$151
Regional Banking FTE adjustment
$2
$2
$2
$2
$2
Regional Banking Net interest income adjusted for impact of FTE (Non-GAAP)
$150
$149
$148
$156
$153
Capital Markets Net interest income (GAAP)
$4
$4
$4
$4
$5
Capital Markets FTE adjustment
$0
$0
$0
$0
$0
Capital Markets Net interest income adjusted for impact of FTE (Non-GAAP)
$4
$4
$4
$4
$5
Corporate Net interest income (GAAP)
($10)
($10)
($9)
($9)
($6)
Corporate FTE adjustment
$0
$0
$0
$0
$0
Corporate Net interest income adjusted for impact of FTE (Non-GAAP)
($10)
($10)
($9)
($9)
($6)
Core Businesses Net interest income (Non-GAAP)1
$142
$141
$141
$149
$150
Core Businesses FTE adjustment (Non-GAAP)
1
$2
$2
$2
$2
$2
Core Businesses Net interest income adjusted for impact of FTE (Non-GAAP)¹
$144
$143
$143
$151
$152
Non-Strategic Net interest income (GAAP)
$17
$19
$20
$21
$24
Non-Strategic FTE adjustment
$0
$0
$0
$0
$0
Non-Strategic Net interest income adjusted for impact of FTE (Non-GAAP)
$17
$19
$20
$21
$24
Consolidated Net interest income (GAAP)
$159
$160
$161
$171
$173
Consolidated FTE adjustment
$2
$2
$2
$2
$2
Consolidated Net interest income adjusted for impact of FTE (Non-GAAP)
$161
$162
$163
$172
$175
Regional Banking Pre-Tax Pre-Provision Net Revenue (PPNR)
Total Revenue (GAAP)
$212
$215
Total Noninterest Expense (GAAP)
$131
$142
Pre-Tax Pre-Provision Net Revenue (Non-GAAP)
$81
$74
Regional Banking Revenue Per FTE ($
in
000s)
Total Revenue (GAAP)
$212,395
$215,371
Average FTEs
2,483
2,549
Revenue Per FTE (Non-GAAP)
$86
$84


Reconciliation to GAAP Financials
29
Slides in this presentation use non-GAAP information of equity, assets, tier 1 capital, risk weighted assets, and various ratios using
one or more
of
those
measures.
That
information
is
not
presented
according
to
generally
accepted
accounting
principles
(GAAP)
and is reconciled to GAAP information below.
Numbers may not add to total due to rounding.
1
Includes goodwill and other intangible assets, net of amortization.                             
2
Current quarter is an estimate.                             
3
Average of quarters 4Q12-3Q13.
($ in millions)
3Q13
2Q13
1Q13
4Q12
3Q12
Average³
Tangible Common Equity (Non-GAAP)
Total equity (GAAP)
$2,433
$2,546
$2,600
$2,509
$2,532
Less: Noncontrolling interest
$295
$295
$295
$295
$295
Less: Preferred stock
$96
$96
$96
$0
$0
Total common equity
$2,042
$2,155
$2,209
$2,214
$2,237
Less: intangible assets (GAAP)¹
$163
$164
$156
$157
$158
Tangible common equity (Non-GAAP)
$1,880
$1,992
$2,053
$2,057
$2,079
Less: unrealized gains on AFS securities, net of tax
$11
$9
$49
$55
$64
Adjusted tangible common equity (Non-GAAP)
$1,868
$1,982
$2,004
$2,002
$2,015
Tangible Assets (Non-GAAP)
Total assets (GAAP)
$24,193
$25,131
$25,166
$25,520
$25,740
Less: intangible assets (GAAP)¹
$163
$164
$156
$157
$158
Tangible assets (Non-GAAP)
$24,031
$24,967
$25,010
$25,363
$25,582
Tier 1 Common (Non-GAAP)
Tier 1 capital²
$2,555
$2,712
$2,739
$2,641
$2,641
Less: noncontrolling
interest
-
FTBNA
preferred
$295
$295
$295
$295
$295
Less: Preferred stock
$96
$96
$96
$0
$0
Less: trust preferred
$200
$200
$200
$200
$200
Tier 1 common (Non-GAAP)²
$1,965
$2,122
$2,148
$2,146
$2,147
Risk Weighted Assets
Risk weighted assets²
$19,275
$20,460
$20,232
$20,153
$20,083
Ratios
Tangible common equity to tangible assets (TCE/TA) (Non-GAAP)
7.82%
7.98%
8.21%
8.11%
8.13%
8.03%
Total equity to total assets (GAAP)
10.06%
10.13%
10.33%
9.83%
9.84%
10.09%
Tier 1 common ratio to risk weighted assets (Non-GAAP)²
10.19%
10.37%
10.62%
10.65%
10.69%
10.46%
Tier 1 capital to total assets (GAAP)²
10.56%
10.79%
10.88%
10.35%
10.26%
10.65%
Tangible common equity to risk weighted assets (TCE/RWA) (Non-GAAP)²
9.75%
9.73%
10.15%
10.21%
10.35%
9.96%
Tangible common equity plus reserves to risk weighted assets (Non-GAAP)²
11.08%
11.01%
11.46%
11.58%
11.75%
11.28%
Total equity plus reserves to total assets (GAAP)
11.11%
11.17%
11.38%
10.92%
10.93%
11.15%
stock


Reconciliation to GAAP Financials
30
Slides
in
this
presentation
use
non-GAAP
information
of
tangible
common
equity,
net
income,
risk
weighted
assets,
FTEs,
revenue, expense, and various ratios using those measures. That information is not presented according to generally accepted
accounting principles (GAAP) and is reconciled to GAAP information below.
Numbers may not add to total due to rounding.
1
Core Businesses include the Regional Banking, Capital Markets, and Corporate segments.
Peer group includes UBSI, ONB, TRMK, IBKC, BXS, UMBF, BOH, VLY, FULT, WTFC, TCB, SUSQ, HBHC, WBS, CBSH, CFR, ASBC,
SNV, BOKF, FNFG.  Peer data is a four quarter average of each metric from 3Q12-2Q13.
Core Businesses Proforma Efficiency Ratio
($ in millions)
3Q13
Consolidated Revenue (GAAP)
$309
Less: Non-Strategic Revenue (GAAP)
$33
Core Businesses Revenue (Non-GAAP)
1
$276
Regional Banking Revenue (GAAP)
$212
Capital Markets Revenue (GAAP)
$68
Corporate Revenue (GAAP)
-$4
Core Businesses Revenue (Non-GAAP)
1
$276
Plus: $17.8mm Increase in NII due to 200bps Rates Shock (Non-GAAP)
$18
Proforma Core Businesses Revenue (Non-GAAP)
1
$294
Regional Banking Expense (GAAP)
$131
Capital Markets Expense (GAAP)
$58
Corporate Expense (GAAP)
$22
Core Businesses Expense (Non-GAAP)
1
$211
Non-Strategic Expense (GAAP)
$222
Consolidated Expense (GAAP)
$434
Consolidated Efficiency Ratio (GAAP)
140.2%
Core Businesses Efficiency Ratio (Non-GAAP)
1
76.3%
Core Businesses Proforma Efficiency Ratio (Non-GAAP)
1
71.7%
Adjusted Noninterest Expense
($ in millions)
2010
3Q13
Consolidated Noninterest Expense (GAAP)
$1,342
$434
Less: GSE-Related Repurchase Charge (GAAP)
$190
$200
Adjusted Consolidated Noninterest Expense (Non-GAAP)
$1,152
$234