Market Overview

First Horizon Releases 2019 Fourth Quarter and Full Year Financial Results

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Company delivers strong performance and solid earnings after ‘transformative' year

2019 results include profitable balance sheet growth, countercyclical business benefit and effective capital deployment

MEMPHIS, Tenn., Jan. 17, 2020 (GLOBE NEWSWIRE) -- First Horizon National Corp. (NYSE:FHN) today announced its 2019 fourth quarter and full year financial results. The company ended a year of high returns and strong growth by announcing a merger of equals agreement with IBERIABANK Corporation and an agreement to acquire 30 branches. Fourth quarter 2019 reported earnings per share were $.37; adjusted earnings per share were $.471.

"First Horizon had a transformative year and delivered strong performance in 2019. Our momentum continued into the fourth quarter as we achieved higher returns, improved profitability, balance sheet growth, and stable credit quality," said Bryan Jordan, chairman and CEO of First Horizon. "In 2019, we delivered on synergies created by the Capital Bank merger. Those successes provide a solid roadmap for our planned merger of equals with IBERIABANK and the acquisition of an additional 30 branches located in attractive markets in North Carolina, Virginia and Georgia. Looking ahead, I remain confident in our ability to continue to deliver on our strategic priorities, build shareholder value and serve even more customers and communities across the South."

2019 Full Year Financial Highlights

Diluted EPS /
Adjusted EPS1
$1.38 / $1.66
  ROA /
Adjusted ROA1
1.08% / 1.30%
  ROCE /
Adjusted ROCE1
9.60% / 11.59%
  ROTCE1 /
Adjusted ROTCE1
14.71% / 17.60%

Additional highlights from the year include:

  • Full year diluted EPS of $1.38 in 2019 compared to full year diluted EPS of $1.65 in 2018; 2018 results driven by a $212.9 million gain from sale of Visa shares
  • Full year adjusted EPS1 of $1.66 in 2019, up from full year adjusted EPS1 of $1.41 in 2018; the increase was due to strong loan and deposit growth, strong expense control, and significant improvement in the fixed income segment
  • Profitable balance sheet growth driven by loan and deposit growth in key markets and specialty areas
  • Regional bank average loan growth of 9% and deposit growth of 9% compared to 2018, enhanced by the successful implementation of the merger with Capital Bank
  • Countercyclical businesses help offset challenging rate environment with Fixed Income revenue up 52% and loans to mortgage companies up 133%
  • Efficiency ratio improved by ~460bps, compared to 2018
  • Effective capital deployment supporting loan growth, acquisitions, share buybacks and dividends; total payout of 70%

Fourth Quarter 2019 Highlights

Diluted EPS /
Adjusted EPS1
$.37/ $.47
  ROA /
Adjusted ROA1
1.12% / 1.40%
  ROCE /
Adjusted ROCE1
9.97% / 12.52%
  ROTCE1 /
Adjusted ROTCE1
15.03% / 18.88%
  • Diluted EPS of $.37 up 6% from $.35 in 3Q19, and adjusted EPS1 of $.47 up 9% from $.43 in 3Q19, due to higher revenue, good expense discipline, and profitable balance sheet growth
  • Total revenue up 5% compared to 3Q19, driven by NII growth and higher fee income
  • Fixed Income ADR up 7% compared to 3Q19
  • Decrease in net charge-offs
  • Declared $.14 per common share quarterly dividend which was paid on Jan. 2, 2020
  • Asset quality remained stable for the quarter

1These are non-GAAP numbers that are reconciled to reported GAAP numbers in the non-GAAP table that follows


Consolidated Highlights
Quarterly/Annually, Unaudited

              4Q19 Changes vs.   Twelve Months Ended   2019 vs.
(Dollars in Thousands) 4Q19   3Q19   4Q18   3Q19 4Q18   2019   2018   2018
Consolidated                                  
Income Statement                                  
Net interest income $ 311,393     $ 300,676     $ 302,512     4   % 3   %   $ 1,210,187     $ 1,220,317     (1 ) %
Noninterest income 183,307     171,735     110,274     7   % 66   %   654,080     722,788     (10 ) %
Total revenues 494,700     472,411     412,786     5   % 20   %   1,864,267     1,943,105     (4 ) %
Provision/(provision credit) for loan losses 10,000     15,000     6,000     (33 ) % 67   %   47,000     7,000     NM    
Noninterest expense 327,447     307,672     281,932     6   % 16   %   1,231,603     1,221,996     1   %
Income before income taxes 157,253     149,739     124,854     5   % 26   %   585,664     714,109     (18 ) %
Provision for income taxes 35,970     35,796     24,049     *   50   %   133,291     157,602     (15 ) %
Net income 121,283     113,943     100,805     6   % 20   %   452,373     556,507     (19 ) %
Net income attributable to noncontrolling interest 2,910     2,883     2,910     1   % *     11,465     11,465     *  
Preferred stock dividends 1,550     1,550     1,550     *   *     6,200     6,200     *  
Net income available to common shareholders $ 116,823     $ 109,510     $ 96,345     7   % 21   %   $ 434,708     $ 538,842     (19 ) %
                                   
NIM 3.26   % 3.21   % 3.38   % 2   % (4 ) %   3.28   % 3.45   % (5 ) %
Diluted Shares 313,353     313,805     323,885     *   (3 ) %   315,657     327,445     (4 ) %
                                   
Balance Sheet                                  
Average Loans $ 30,706,319     $ 30,016,388     $ 27,154,643     2   % 13   %   $ 29,188,638     $ 27,213,828     7   %
Average Deposits 32,777,047     32,371,398     31,847,754     1   % 3   %   32,403,048     30,903,092     5   %
Average Assets 42,885,790     41,940,901     40,302,528     2   % 6   %   41,744,264     40,225,459     4   %
Average Common Equity 4,648,813     4,571,286     4,339,643     2   % 7   %   4,529,844     4,226,474     7   %
NM - Not meaningful 
* Amount is less than one percent. 

Consolidated 4Q19 highlights include:

  • NII up 4% compared to 3Q19 due to higher loan accretion and lower funding costs, somewhat offset by the negative impact of interest rates on loans (including LIBOR and Prime)
  • Net interest margin (NIM) increased to 3.26% from 3.21% in 3Q19; increase due to the same factors affecting NII
  • Average loan growth of 2% and average deposit growth of 1% compared to 3Q19


Regional Banking Highlights
Quarterly/Annually, Unaudited

              4Q19 Changes vs.   Twelve Months Ended   2019 vs.
(Dollars in Thousands) 4Q19   3Q19   4Q18   3Q19 4Q18   2019   2018   2018
Regional Banking                                  
Net interest income $ 310,696     $ 302,370     $ 298,288     3   % 4   %   $ 1,196,318     $ 1,197,471     *  
Noninterest income 89,553     85,776     70,003     4   % 28   %   329,834     311,763     6   %
Total revenues 400,249     388,146     368,291     3   % 9   %   1,526,152     1,509,234     1   %
Provision for loan losses 14,369     20,472     8,488     (30 ) % 69   %   66,059     24,643     NM    
Noninterest expense 202,967     193,250     206,001     5   % (1 ) %   789,033     826,262     (5 ) %
Income before income taxes $ 182,913     $ 174,424     $ 153,802     5   % 19   %   $ 671,060     $ 658,329     2   %
                                   
Balance Sheet                                  
Average Loans $ 29,721,827     $ 28,958,093     $ 25,877,397     3   % 15   %   $ 28,092,243     $ 25,784,941     9   %
Average Deposits 30,413,210     30,044,382     28,315,862     1   % 7   %   30,002,759     27,604,091     9   %
NM - Not meaningful                                  
* Amount is less than one percent.                                  

Regional Banking 4Q19 highlights include:

  • Average loans grew 3% from 3Q19 due to increases in C&I and specialty areas, with particular strength in loans to mortgage companies; average deposits grew 1% from 3Q19
  • NII up 3% compared to 3Q19 from higher loan accretion and commercial loan growth
  • Fee income up 4% compared to 3Q19


Fixed Income Highlights
Quarterly/Annually, Unaudited

              4Q19 Changes vs.   Twelve Months Ended   2019 vs.
(Dollars in Thousands) 4Q19   3Q19   4Q18   3Q19 4Q18   2019   2018   2018
Fixed Income                                  
Net interest income $ 7,233     $ 5,309     $ 9,011     36   % (20 ) %   $ 26,044     $ 35,753     (27 ) %
Noninterest income 81,185     77,809     39,678     4   % NM       278,423     164,769     69   %
  Total revenues 88,418     83,118     48,689     6   % 82   %   304,467     200,522     52   %
Noninterest expense 62,329     67,787     46,516     (8 ) % 34   %   236,660     189,373     25   %
  Income before income taxes $ 26,089     $ 15,331     $ 2,173     70   % NM       $ 67,807     $ 11,149     NM    
NM - Not meaningful 

Fixed Income 4Q19 highlights include:

  • ADR of $1.1 million, compared to ADR of $994 thousand in 3Q19, up 7% with growth across multiple trading desks
  • Steeper yield curve and market volatility favorably impacted 4Q19 activity
  • Other product revenue up 9% from 3Q19 to $15.4 million


Capital and Liquidity Highlights
Quarterly/Annually, Unaudited

              4Q19 Changes vs.
(Dollars in Millions) 4Q19   3Q19   4Q18   3Q19 4Q18
Capital and Liquidity Highlights                    
Common dividends declared $ 43.5     $ 43.5     $ 38.4     *   13   %
Preferred dividends declared 1.6     1.6     1.6     *   *    
Share repurchases     28.2     80.5     NM   NM    
Capital Ratios (a)                    
Common Equity Tier 1 9.20   % 9.01   % 9.77   %        
Tier 1 10.15   % 9.97   % 10.8   %        
Total Capital 11.22   % 11.01   % 11.94   %        
Leverage 9.04   % 9.05   % 9.09   %        
(a) Regulatory capital ratios calculated under the Basel III risk-based capital rules as phased-in; current quarter is an estimate.
NM - Not meaningful                    
* Amount is less than one percent.                    

Capital and Liquidity 4Q19 highlights include:

  • Declared quarterly common dividend of $.14 per share in 4Q19; dividend payout of 37%
  • CET1 grew to 9.20% in 4Q19 up from 9.01% in 3Q19
  • No share repurchases in 4Q19 due to the pending merger of equals with IBERIABANK


Asset Quality Highlights
Quarterly/Annually, Unaudited

              4Q19 Changes vs.
(Dollars in Thousands) 4Q19   3Q19   4Q18   3Q19 4Q18
Asset Quality Highlights                    
Allowance for loan losses $ 200,307     $ 193,149     $ 180,424     4   % 11   %
Allowance / loans % 0.64 %   0.62 %   0.66 %          
Net Charge-offs $ 2,842     $ 14,600     $ 11,535     (81 ) % (75 ) %
Net charge-offs % 0.04 %   0.19 %   0.17 %          
Nonperforming Loans (a) $ 162,165     $ 172,495     $ 147,749     (6 ) % 10   %
NPL % 0.52 %   0.55 %   0.54 %          
30+ delinquencies $ 57,911     $ 70,675     $ 75,164     (18 ) % (23 ) %
30+ delinquencies % 0.19 %   0.23 %   0.27 %          
(a) Excludes loans held-for-sale.                    

Asset Quality 4Q19 highlights include:

  • Decrease in net charge-offs compared to 3Q19 largely driven by the Regional Banking commercial portfolio
  • NPLs within the Regional Banking and Non-strategic portfolios decreased $5.6 million and $4.8 million compared to 3Q19, respectively, primarily driven by improvements in the consumer real estate portfolios
  • 30+ delinquencies decreased 18% compared to 3Q19, and 23% compared to 4Q18


Use of Non-GAAP Measures
Several financial measures in this release are non-GAAP, meaning they are not presented in accordance with generally accepted accounting principles (GAAP) in the U.S. The non-GAAP items presented in this release are adjusted earnings per share ("EPS"), adjusted return on average common equity ("ROCE"), return on tangible common equity ("ROTCE"), adjusted ROTCE, and adjusted return on average assets ("ROA"). These profitability measures are reported to First Horizon's management and directors through various internal reports. First Horizon's management believes these measures are relevant to understanding the financial results of First Horizon and its business segments. Non-GAAP measures are not formally defined by GAAP or codified in the federal banking regulations, and other entities may use calculation methods that differ from those used by First Horizon. First Horizon has reconciled each of these measures to a comparable GAAP measure below:


FHN NON-GAAP TO GAAP RECONCILIATION                      
Quarterly/Annually, Unaudited                       
(Dollars and shares in thousands, except per share data)                      
                Twelve  Months Ended  
Adjusted Diluted EPS     4Q19
      3Q19
          2019
      2018
   
Net income available to common ("NIAC") (GAAP) a $ 116,823     $ 109,510             $ 434,708     $ 538,842    
Plus Tax effected notable items (Non-GAAP) (a) (b)   $ 29,854     $ 24,497             $ 90,220     $ (78,183 )  
Adjusted NIAC (Non-GAAP) b $ 146,677     $ 134,007             $ 524,928     $ 460,659    
                       
Diluted Shares (GAAP) c 313,353     313,805           315,657     327,445    
                       
Diluted EPS (GAAP) a/c $ 0.37     $ 0.35             $ 1.38     $ 1.65    
Adjusted diluted EPS (Non-GAAP) b/c $ 0.47     $ 0.43             $ 1.66     $ 1.41    
                       
Adjusted Return on Assets ("ROA")     4Q19
              2019        
Net Income ("NI") (GAAP)   $ 121,283                     $ 452,373            
Plus Tax effected notable items (Non-GAAP) (a) (b)   $ 29,854                     $ 90,220            
Adjusted NI (Non-GAAP)   $ 151,137                     $ 542,593            
                       
NI (quarters are annualized) (GAAP) d $ 481,177                     $ 452,373            
Adjusted NI (quarters are annualized) (Non-GAAP) e $ 599,620                     $ 542,593            
                       
Average assets (GAAP) f $ 42,885,790                     $ 41,744,264            
                       
ROA (GAAP) d/f 1.12   %             1.08   %      
Adjusted ROA (Non-GAAP) e/f 1.40   %             1.30   %      
                       
Adjusted Return on Average Common Equity ("ROCE")/  Return on Average Tangible Common Equity ("ROTCE")     4Q19
              2019
       
NIAC (GAAP)   $ 116,823                     $ 434,708            
Plus Tax effected notable items (Non-GAAP) (a) (b)   $ 29,854                     $ 90,220            
Adjusted NIAC (Non-GAAP)   $ 146,677                     $ 524,928            
                       
NIAC (quarters are annualized) (GAAP) g $ 463,483                     $ 434,708            
Adjusted NIAC (quarters are annualized) (Non-GAAP) h $ 581,925                     $ 524,928            
                       
Average Common Equity (GAAP) i $ 4,648,813                     $ 4,529,844            
Intangible Assets (GAAP) (c)   $ 1,566,079                     $ 1,575,338            
Average Tangible Common Equity (Non-GAAP) j $ 3,082,734                     $ 2,954,506            
Plus Equity impact for notable items (d)               $ 27,897            
Adjusted Average Tangible Common Equity (non-GAAP) k $ 3,082,734                     $ 2,982,403            
                       
ROCE (GAAP) g/i 9.97   %             9.60   %      
Adjusted ROCE (Non-GAAP) h/i 12.52   %             11.59   %      
                       
ROTCE (Non-GAAP) g/j 15.03   %             14.71   %      
Adjusted ROTCE (Non-GAAP) h/k 18.88   %             17.60   %      

(a) 4Q19 includes $15.7 million of pre-tax acquisition-related expenses largely associated with the pending merger of equals with IBERIABANK Corporation. ("IBKC"), $11.0 million of pre-tax expense related to charitable contributions, $9.1 million of pre-tax rebranding expenses, and $1.2 million of pre-tax restructuring-related expenses associated with efficiency initiatives; 3Q19 includes $9.0 million of pre-tax acquisition-related expenses primarily associated with the Capital Bank Financial Corp. ("CBF") acquisition, $7.8 million of pre-tax restructuring-related expenses associated with efficiency initiatives, $7.5 million net pre-tax expense related to the resolution of legal matters, $4.0 million of pre-tax negative valuation adjustments associated with derivatives related to prior sales of Visa Class B shares, and $3.1 million of pre-tax rebranding expenses, and have been adjusted using an incremental tax rate of approximately 19 percent in 4Q19 and 22 percent in 3Q19.
(b) 2019 includes $39.8 million of pre-tax restructuring-related expenses associated with efficiency initiatives, $39.0 million of pre-tax acquisition-related expenses primarily associated with the pending merger of equals with IBKC and the CBF acquisition, $21.3 million of pre-tax rebranding expenses, $11.0 million of pre-tax expense related to charitable contributions, $4.0 million of pre-tax negative valuation adjustments associated with derivatives related to prior sales of Visa Class B shares, and a net $(.9) million pre-tax expense reversal related to the settlements of litigation matters; 2018 includes a $(212.9) million gain from the sale of Visa Class B Shares, $99.4 million of pre-tax acquisition-related items primarily associated with the CBF acquisition, a $(3.3) million gain on sale of a building, a $4.1 million of valuation adjustments associated with derivatives related to prior sales of Visa Class B shares, and an $8.7 million pre-tax adjustment related the return on excess fees received from Capital Bank debit card transactions, and have been adjusted using an incremental tax rate of approximately 21 percent in 2019 and 24 percent in 2018.
(c) Includes goodwill and other intangible assets, net of amortization.
(d) Includes the average after-tax impact of $27.9 million of notable items recognized in 2019.

Conference call

Management will hold a conference call at 8:30 a.m. Central Time today to review earnings and performance trends. There will also be a live webcast accompanied by the slide presentation available at https://ir.fhnc.com/Event.  The call and slide presentation may involve forward-looking information, including guidance.

Analysts, investors and interested parties may call toll-free starting at 8:15 a.m. CT on January 17 by dialing 888-317-6003 (if calling from the U.S.) or 412-317-6061 (if calling from outside the U.S) and entering access code 8848081. The conference call will begin at 8:30 a.m. CT.

A replay of the call will be available beginning at noon CT on January 17 until midnight CT on January 31. To listen to the replay, dial 877-344-7529 (U.S. callers) or 412-317-0088 (international callers); the access code is 10137984. A replay of the webcast will also be available at http://ir.fhnc.com/Event by midnight CT on January 17 and will be archived on the site for one year. 

Disclaimers and Other Information

Forward- Looking Statements
This communication contains forward-looking statements involving significant risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking information. Those factors include general economic and financial market conditions, including expectations of and actual timing and amount of interest rate movements including the slope of the yield curve, competition, ability to execute business plans, geopolitical developments, recent and future legislative and regulatory developments, inflation or deflation, market (particularly real estate market) and monetary fluctuations, natural disasters, customer, investor and regulatory responses to these conditions and items already mentioned in this press release, as well as critical accounting estimates and other factors described in First Horizon's annual report on Form 10-K and other recent filings with the SEC. First Horizon disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements included herein or therein to reflect future events or developments or changes in expectations.

Important Other Information

In connection with First Horizon's proposed merger-of-equals transaction with IBERIABANK Corporation, First Horizon has filed with the SEC a registration statement on Form S-4 (No. 333-235757) to register the shares of First Horizon's capital stock to be issued in connection with the proposed transaction. When effective, the registration statement will include a joint proxy statement of First Horizon and IBERIABANK which will be sent to the shareholders of First Horizon and IBERIABANK seeking their approval of the proposed transaction.

This communication does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval. INVESTORS AND SHAREHOLDERS OF FIRST HORIZON AND IBERIABANK ARE URGED TO READ, AS FILED TO DATE AND AS AMENDED IN THE FUTURE, THE REGISTRATION STATEMENT ON FORM S-4, THE JOINT PROXY STATEMENT/ PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT FIRST HORIZON, IBERIABANK AND THE PROPOSED TRANSACTION.

Investors and shareholders will be able to obtain a free copy of the registration statement, including the joint proxy statement/prospectus, as well as other relevant documents filed with the SEC containing information about First Horizon and IBERIABANK, without charge, at the SEC's website (http://www.sec.gov). Copies of the registration statement, including the joint proxy statement/prospectus, and the filings with the SEC that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to Clyde A. Billings Jr., First Horizon, 165 Madison, Memphis, TN 38103, telephone (901) 523-5679, or Jefferson G. Parker, IBERIABANK, 200 West Congress Street, Lafayette, LA 70501, telephone (504) 310-7314.   

Participants in the Solicitation

First Horizon, IBERIABANK and certain of their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding First Horizon's directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March 11, 2019, and certain of its Current Reports on Form 8-K. Information regarding IBERIABANK's directors and executive officers is available in its definitive proxy statement, which was filed with SEC on March 28, 2019, and certain of its Current Reports on Form 8-K. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

About First Horizon

First Horizon National Corp. (NYSE:FHN) provides financial services through First Horizon Bank, First Horizon Advisors, and FHN Financial businesses. The banking subsidiary was founded in 1864 and has the largest deposit market share in Tennessee. The company operates approximately 270 bank locations across the Southeast U.S. and 29 FHN Financial offices across the entire U.S. First Horizon Advisors wealth management group has more than 300 financial professionals and about $4.8 billion in assets under management. FHN Financial is a capital markets industry leader in fixed income sales, trading and strategies for institutional customers in the U.S. and abroad. The company is recognized as one of the nation's best employers by Fortune and Forbes magazines and a Top 10 Most Reputable U.S. bank. More information is available at www.FirstHorizon.com.

FHN-G

CONTACT:
First Horizon Investor Relations, Aarti Bowman, (901) 523-4017
  First Horizon Media Relations, Silvia Alvarez, (901) 523-4465 

A PDF accompanying this release is available at http://ml.globenewswire.com/Resource/Download/3b69ae81-3c49-4ac2-9b08-569f4cdd7510

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