Exhibit 99.1

 

 

SECOND QUARTER 2017

 

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
Income Statement	6
Other Income and Other Expense	7
Balance Sheet
Period End Balance Sheet	8
Average Balance Sheet	9
Net Interest Income	10
Average Balance Sheet: Yields and Rates	11
Capital Highlights	12
Business Segment Detail
Segment Highlights	13
Regional Banking	14
Fixed Income and Corporate	15
Non-Strategic	16
Asset Quality
Asset Quality: Consolidated	17
Asset Quality: Regional Banking and Corporate	19
Asset Quality: Non-Strategic	20
Portfolio Metrics	21
Non-GAAP to GAAP Reconciliation	22
Glossary of Terms	23

 

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 forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements to reflect future events or developments.

 

Use of Non-GAAP Measures and Regulatory Measures that are not GAAP

Certain measures are included in this financial supplement that are “non-GAAP,” meaning (under U.S. financial reporting rules) they are not presented in accordance with generally accepted accounting principles (“GAAP”) in the U.S. and also are not codified in U.S. banking regulations currently applicable to FHN. Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN’s management believes such measures are relevant to understanding the financial condition, capital position, and financial results of FHN and its business segments. Non-GAAP measures are reported to FHN’s management and Board of Directors through various internal reports.

 

Presentation of regulatory measures, some of which follow regulatory definitions rather than GAAP, provides a meaningful base for comparability to other financial institutions subject to the same regulations as FHN. Such measures are used by the various banking regulators in reviewing the performance, stability, and capital adequacy of financial institutions they regulate. Although not GAAP terms, these regulatory measures are not considered “non-GAAP” under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. Regulatory measures used in this financial supplement include: common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk based capital regulations; risk weighted assets (“RWA”), which is a measure of total on- and off-balance sheet assets adjusted for credit and market risk, used to determine regulatory capital ratios; and pre-provision net revenue (“PPNR”), calculated by adding the provision/(provision credit) for loan losses to income before income taxes, excluding securities gains/(losses).

 

The non-GAAP measures presented in this financial supplement are return on average tangible common equity (“ROTCE”), tangible common equity (“TCE”) to tangible assets (“TA”), and tangible book value (“TBV”) per common share.

 

Refer to the tabular reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items on page 22 of this financial supplement.

FIRST HORIZON NATIONAL CORPORATION SEGMENT STRUCTURE

 

FHN PERFORMANCE HIGHLIGHTS

 

 

Summary of Second Quarter 2017 Notable Items

	Segment		Item		Income Statement		Amount		Comments
*	Non-Strategic		Mortgage repurchase liability		Noninterest expense: Repurchase and foreclosure provision		$(20.0) million		Favorable pre-tax expense reversal of repurchase and foreclosure provision as a result of the settlement of certain repurchase claims
*	Corporate		Acquisition expenses		Noninterest expense: Various		$6.4 million		Pre-tax acquisition-related expenses primarily associated with the Capital Bank Financial (“CBF”) and Coastal Securities, Inc. (“Coastal”) acquisitions
*	Corporate		Capital loss valuation allowance adjustment		Provision for income taxes		$(19.5) million		Favorable effective tax rate adjustment associated with the reversal of a capital loss deferred tax valuation allowance

 

Second Quarter 2017 vs. First Quarter 2017

 

Consolidated

•	Net income available to common shareholders increased to $90.8 million, or $.38 per diluted share in second quarter from $54.0 million, or $.23 per diluted share in first quarter
•	Net interest income (“NII”) increased to $200.7 million in second quarter from $189.7 million in first quarter; Net Interest Margin (“NIM”) increased to 3.07 percent in second quarter from 2.92 percent in prior quarter

	•	The increase in NII was due in large part to higher average balances of loans to mortgage companies and loan growth within the Regional banking other commercial portfolios, higher average balances of fixed income trading inventory, the positive impact of higher short-term market rates and an additional day in second quarter relative to the prior quarter
	•	NII was negatively impacted by run-off of the non-strategic loan portfolios in second quarter
	•	The increase in NIM was primarily due to a decrease in average excess cash held at the Fed during second quarter relative to first quarter and to a lesser extent higher short-term market rates and loan fees, somewhat offset by higher average balances of fixed income trading inventory

•	Noninterest income (including securities gains) increased $10.7 million to $127.7 million in second quarter from $116.9 million in prior quarter

•

The increase was largely driven by higher fixed income revenues from the Coastal acquisition and higher fees within the regional banking segment

•

Noninterest expense decreased to $217.9 million in second quarter from $222.2 million in first quarter driven by a favorable expense reversal of $20.0 million related to the settlement of certain repurchase claims, somewhat offset by $6.4 million of acquisition-related expenses primarily associated with the CBF and Coastal acquisitions and a $3.2 million charitable contribution made to the First Tennessee Foundation in second quarter

•

Provision for income taxes was $17.3 million on $112.5 million of pre-tax income in second quarter compared to $27.1 million on $85.4 million of pre-tax income in prior quarter

◦

The decrease in provision for income taxes was primarily the result of a favorable effective tax rate adjustment associated with the reversal of the capital loss deferred tax valuation allowance mentioned in the notable items table above

•	Period-end loans increased to $20.0 billion in second quarter from $19.1 billion in prior quarter; average loans increased 2 percent to $19.2 billion in second quarter
•	Period-end deposits were $22.3 billion and $23.5 billion in second and first quarter, respectively; average deposits decreased 1 percent linked quarter to $22.5 billion in second quarter

◦

The decrease in average deposits was the result of an 18 percent decline in market-indexed deposits; consumer interest and DDA increased 4 percent linked-quarter

 

Regional Banking

	•	Pre-tax income increased to $113.8 million in second quarter from $101.2 million in first quarter; pre-provision net revenue was $113.7 million and $104.3 million in second and first quarter, respectively
	•	Period-end loans increased to $18.5 billion in second quarter from $17.5 billion in first quarter; average loans increased 3 percent to $17.7 billion in second quarter

•

The increase in period-end and average loans was primarily driven by an increase in loans to mortgage companies coupled with increases in other commercial loan portfolios

•	Period-end deposits were $20.4 billion and $20.5 billion in second and first quarters, respectively; average deposits increased 2 percent to $20.1 billion
•	NII increased to $202.0 million in second quarter from $193.4 million in first quarter

•

The increase in NII was largely the result of higher core deposits, increases in loans to mortgage companies and other commercial loans, an additional day in second quarter relative to the prior quarter, and higher loan fees

•	Provision expense was $.3 million in second quarter compared to $3.1 million in the prior quarter reflecting continued strong performance in both the commercial and consumer portfolios as both 30+ delinquencies and nonperforming loans declined as a result of favorable resolutions and payoffs

•

Reserves decreased $2.8 million from first quarter, primarily within the consumer portfolio, while net charge-offs were $3.0 million in second quarter compared to $1.2 million in first quarter

•	Noninterest income was $64.7 million in second quarter, up from $59.0 million in first quarter largely driven by increases in deposit fees and trust income

•

The increase in deposit fees was primarily attributable to higher non-sufficient funds (“NSF”) fees in second quarter relative to the prior quarter

•	Noninterest expense increased to $152.7 million in second quarter from $148.1 million in first quarter

FHN PERFORMANCE HIGHLIGHTS (continued)

Second Quarter 2017 vs. First Quarter 2017 (continued)

 

Fixed Income

•	Acquired substantially all of the assets and assumed substantially all of the liabilities of Coastal Securities, Inc. early in second quarter
•	Pre-tax income was $6.2 million in second quarter, up from $3.3 million in first quarter
•	NII increased to $5.0 million in second quarter from $1.2 million in prior quarter

•

The increase in NII was due to higher net inventory positions as a result of the Coastal acquisition

•	Noninterest income increased to $55.2 million in second quarter from $50.8 million in first quarter

	•	Fixed income product revenue was $45.6 million in second quarter, up from $42.7 million in first quarter
	•	Fixed income product average daily revenue (“ADR”) was $723 thousand and $689 thousand in second and first quarter, respectively
	•	Other product revenue increased $1.5 million to $9.6 million in second quarter largely due to increases in fees from loan and derivative sales

•	Noninterest expense was $54.0 million in second quarter compared to $48.7 million in first quarter primarily driven by an increase in variable compensation expense and higher expenses as a result of the Coastal acquisition, somewhat offset by a decrease in FICA

 

Corporate

	•	Pre-tax loss was $33.3 million in second quarter compared to pre-tax loss of $25.5 million in prior quarter
	•	NII was negative $15.0 million and negative $14.1 million in second and first quarter, respectively

•

Estimated effective duration of the securities portfolio was 3.8 years in second quarter compared to 4.5 years in first quarter

	•	Noninterest income (including net securities gains) was $6.2 million in second quarter compared to $5.5 million in first quarter; the increase was largely driven by $1.1 million of BOLI gains recognized in second quarter
	•	Noninterest expense was $24.6 million in second quarter compared to $16.9 million in first quarter

•

Increase primarily driven by $6.4 million of acquisition-related expenses primarily associated with the CBF and Coastal acquisitions and a $3.2 million charitable contribution to the First Tennessee Foundation made in second quarter, somewhat offset by $2.2 million of deferred compensation BOLI gains recognized in second quarter

 

Non-Strategic

	•	Pre-tax income increased to $25.8 million in second quarter from $6.5 million in first quarter, driven largely by a reversal of prior repurchase provisioning mentioned in the notable items table
	•	NII was $8.7 million in second quarter compared to $9.3 million in first quarter
	•	The provision credit was $2.3 million in second quarter compared to a provision credit of $4.1 million in first quarter

•

The level of provision continues to reflect declining balances combined with stable performance within the legacy portfolio

•

Noninterest expense decreased $21.9 million to negative $13.3 million in second quarter primarily driven by $21.7 million of reversals of repurchase and foreclosure provision as a result of the settlements/recoveries of certain repurchase claims

 

Asset Quality

•

Allowance for loan losses decreased to $197.3 million in second quarter from $202.0 million in first quarter; the allowance to loans ratio decreased 7 bps to 99 basis points in second quarter

•

The decrease in reserves was primarily driven by the consumer portfolio which decreased $3.6 million while the commercial portfolio reserves decreased $1.1 million

•

Net charge-offs were $2.7 million in second quarter compared to $.9 million of net recoveries in first quarter

	•	Regional bank net charge-offs increased $1.8 million to $3.0 million in second quarter
	•	Non-strategic net recoveries decreased $1.8 million to $.3 million in second quarter

	•	Nonperforming loans (“NPLs”), excluding loans held-for-sale, decreased to $129.8 million in second quarter from $143.4 million in first quarter; the decrease was largely driven by the consumer real estate portfolio and a payoff within the C&I portfolio
	•	Nonperforming assets (“NPAs”), excluding loans held-for-sale, were $136.8 million compared to $153.7 million
	•	30+ delinquencies as a percentage of total loans decreased to 27 basis points in second quarter compared to 39 basis points in first quarter; the decrease was primarily driven by a few credits within the C&I portfolio, all of which were favorably resolved during second quarter 2017
	•	TDRs decreased to $318.8 million in second quarter from $337.2 million in prior quarter

 

Taxes

•

The effective tax rates for second and first quarters were 15.34 percent and 31.66 percent, respectively

	•	The decrease in the effective rate from first quarter was primarily related to the reversal of a capital loss deferred tax valuation allowance
	•	The rates also reflect the favorable effect from permanent benefits. Permanent benefits primarily consist of tax credit investments, life insurance, and tax-exempt interest

 

Capital and Liquidity

	•	Declared $.09 per common share quarterly dividend in second quarter, aggregating $21.0 million, which was paid on July 3, 2017
	•	Declared aggregate preferred quarterly dividend of $1.6 million in second quarter which was paid on July 10, 2017
	•	There were no repurchases of shares in second quarter under the current share repurchase program (unrelated to employee stock award programs); $189.7 million remains in the stock purchase authorization first announced in 2014, currently scheduled to expire January 31, 2018
	•	Capital ratios (regulatory capital ratios calculated under the Basel III risk-based capital rules as phased-in; current quarter is an estimate)

	•	Total equity to total assets (GAAP) of 9.63 percent in second quarter compared to 9.25 percent in prior quarter
	•	Tangible common equity to tangible assets (Non-GAAP) of 7.41 percent in second quarter compared to 7.27 percent in prior quarter
	•	Common Equity Tier 1 of 9.81 percent in second quarter compared to 10.20 percent in prior quarter
	•	Tier 1 of 10.95 percent in second quarter compared to 11.35 percent in prior quarter
	•	Total Capital of 11.94 percent in second quarter compared to 12.39 percent in prior quarter
	•	Leverage of 9.38 percent in second quarter compared to 9.31 percent in prior quarter

FHN CONSOLIDATED INCOME STATEMENT

Quarterly, Unaudited

 

																						2Q17 Changes vs
(Dollars in thousands, except per share data)		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Interest income		$	235,341			$	218,811			$	219,897			$	206,972			$	197,376				8	%			19	%
Less: interest expense			34,640				29,103				24,346				21,777				21,112				19	%			64	%
Net interest income			200,701				189,708				195,551				185,195				176,264				6	%			14	%
Provision/(provision credit) for loan losses			(2,000	)			(1,000	)			—				4,000				4,000				NM				NM
Net interest income after provision for loan losses			202,701				190,708				195,551				181,195				172,264				6	%			18	%
Noninterest income:
Fixed income			55,110				50,678				51,923				71,748				77,913				9	%			(29	)%
Deposit transactions and cash management			27,858				24,565				27,504				27,221				26,991				13	%			3	%
Brokerage, management fees and commissions			12,029				11,906				11,003				10,828				10,665				1	%			13	%
Trust services and investment management			7,698				6,653				7,053				6,885				7,224				16	%			7	%
Bankcard income			5,605				5,455				6,353				6,260				6,558				3	%			(15	)%
Bank-owned life insurance			4,351				3,247				3,558				3,997				3,743				34	%			16	%
Securities gains/(losses), net			405				44				(132	)			(200	)			99				NM				NM
Other (a)			14,617				14,391				16,815				21,806				12,321				2	%			19	%
Total noninterest income			127,673				116,939				124,077				148,545				145,514				9	%			(12	)%
Adjusted gross income after provision for loan losses			330,374				307,647				319,628				329,740				317,778				7	%			4	%
Noninterest expense:
Employee compensation, incentives, and benefits			139,088				134,932				137,324				145,103				143,370				3	%			(3	)%
Repurchase and foreclosure provision (b)			(21,733	)			(238	)			(1,104	)			(218	)			(31,400	)			NM				31	%
Legal fees			3,496				5,283				6,038				4,750				5,891				(34	)%			(41	)%
Professional fees (c)			9,659				4,746				4,827				4,859				4,284				NM				NM
Occupancy			12,800				12,340				12,818				12,722				12,736				4	%			1	%
Computer software			12,285				10,799				11,909				10,400				11,226				14	%			9	%
Contract employment and outsourcing			3,255				2,958				2,696				2,443				2,497				10	%			30	%
Operations services			11,524				10,875				10,913				10,518				10,521				6	%			10	%
Equipment rentals, depreciation, and maintenance			7,036				6,351				7,959				6,085				7,182				11	%			(2	)%
FDIC premium expense			5,927				5,739				6,095				5,721				4,848				3	%			22	%
Advertising and public relation (d)			4,095				4,601				6,093				6,065				4,481				(11	)%			(9	)%
Communications and courier			4,117				3,800				3,593				3,883				3,039				8	%			35	%
Amortization of intangible assets			1,964				1,232				1,300				1,299				1,299				59	%			51	%
Other (a)			24,404				18,787				27,436				19,928				46,848				30	%			(48	)%
Total noninterest expense			217,917				222,205				237,897				233,558				226,822				(2	)%			(4	)%
Income before income taxes			112,457				85,442				81,731				96,182				90,956				32	%			24	%
Provision for income taxes (e)			17,253				27,054				24,008				28,547				30,016				(36	)%			(43	)%
Net income			95,204				58,388				57,723				67,635				60,940				63	%			56	%
Net income attributable to noncontrolling interest			2,852				2,820				2,879				2,883				2,852				1	%				*
Net income attributable to controlling interest			92,352				55,568				54,844				64,752				58,088				66	%			59	%
Preferred stock dividends			1,550				1,550				1,550				1,550				1,550					*				*
Net income available to common shareholders		$	90,802			$	54,018			$	53,294			$	63,202			$	56,538				68	%			61	%
Common Stock Data
EPS		$	0.39			$	0.23			$	0.23			$	0.27			$	0.24				70	%			63	%
Basic shares (thousands)			233,482				233,076				232,731				231,856				231,573					*			1	%
Diluted EPS		$	0.38			$	0.23			$	0.23			$	0.27			$	0.24				65	%			58	%
Diluted shares (thousands)			236,263				236,855				235,590				234,092				233,576					*			1	%
Key Ratios & Other
Return on average assets (annualized) (f)			1.32	%			0.82	%			0.80	%			0.97	%			0.91	%
Return on average common equity (“ROE”) (annualized) (f)			15.26	%			9.40	%			9.00	%			10.80	%			10.04	%
Return on average tangible common equity (“ROTCE”)(annualized) (f)(g)			17.30	%			10.33	%			9.89	%			11.90	%			11.10	%
Fee income to total revenue (f)			38.80	%			38.13	%			38.84	%			44.54	%			45.21	%
Efficiency ratio (f)			66.44	%			72.47	%			74.40	%			69.94	%			70.51	%
Full time equivalent employees			4,328				4,258				4,248				4,246				4,228

NM - Not meaningful

* Amount is less than one percent.

(a)	Refer to the Other Income and Other Expense table on page 7 for additional information.

(b)	Expense reversals driven by the settlements/recoveries of certain repurchase claims.

(c)	2Q17 increase largely driven by acquisition-related expenses primarily associated with the CBF and Coastal acquisitions.

(d)	4Q16 includes $1.1 million related to CRA initiatives; 3Q16 increase related to a promotional branding campaign.

(e)	2Q17 decrease primarily associated with a favorable effective tax rate adjustment associated with the reversal of a capital loss deferred tax valuation allowance.

(f)	See Glossary of Terms for definitions of Key Ratios.

(g)	This non-GAAP measure is reconciled to ROE (GAAP) in the Non-GAAP to GAAP reconciliation on page 22 of this financial supplement.

FHN OTHER INCOME AND OTHER EXPENSE

Quarterly, Unaudited

 

																						2Q17 Changes vs.
(Thousands)		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Other Income
ATM and interchange fees		$	3,083			$	2,778			$	3,047			$	3,081			$	2,879				11	%			7	%
Electronic banking fees			1,306				1,323				1,301				1,398				1,381				(1	)%			(5	)%
Letter of credit fees			1,122				1,036				946				981				1,115				8	%			1	%
Mortgage banking (a)			1,268				1,261				2,820				5,524				598				1	%			NM
Deferred compensation (b)			1,491				1,827				863				1,038				795				(18	)%			88	%
Insurance commissions			592				883				680				1,262				552				(33	)%			7	%
Other service charges			3,109				2,984				3,018				3,004				2,996				4	%			4	%
Other (c)			2,646				2,299				4,140				5,518				2,005				15	%			32	%
Total		$	14,617			$	14,391			$	16,815			$	21,806			$	12,321				2	%			19	%
Other Expense
Litigation and regulatory matters		$	533			$	(292	)		$	4,684			$	260			$	26,000				NM				(98	)%
Tax credit investments			942				942				1,024				788				831					*			13	%
Travel and entertainment			3,162				2,348				3,240				2,478				2,495				35	%			27	%
Employee training and dues			1,453				1,543				1,603				1,360				1,338				(6	)%			9	%
Customer relations			1,543				1,336				1,451				1,442				1,483				15	%			4	%
Miscellaneous loan costs			699				622				628				676				565				12	%			24	%
Supplies			1,093				863				1,320				1,158				930				27	%			18	%
Foreclosed real estate			446				204				648				815				(432	)			NM				NM
Other insurance and taxes			2,443				2,390				1,939				2,625				3,014				2	%			(19	)%
Other (d)			12,090				8,831				10,899				8,326				10,624				37	%			14	%
Total		$	24,404			$	18,787			$	27,436			$	19,928			$	46,848				30	%			(48	)%

NM - Not meaningful

* Amount is less than one percent.
(a)	4Q16 includes a $1.5 million gain related to the reversal of a contingency accrual associated with prior sales of MSR; 3Q16 includes $4.4 million of gains primarily related to recoveries associated with prior legacy mortgage servicing sales.

(b)	Amounts driven by market conditions and are mirrored by changes in deferred compensation expense which is included in employee compensation expense.

(c)	3Q16 includes a $1.8 million gain on the sales of properties.

(d)	2Q17 includes a $3.2 million charitable contribution to the First Tennessee Foundation; 2Q16 includes $2.5 million of negative valuation adjustments associated with derivatives related to prior sales of Visa Class B shares.

FHN CONSOLIDATED PERIOD-END BALANCE SHEET

Quarterly, Unaudited

 

																						2Q17 Changes vs.
(Thousands)		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Assets:
Investment securities		$	3,959,592			$	3,953,632			$	3,957,846			$	4,041,934			$	4,023,576					*			(2	)%
Loans held-for-sale (a)			432,771				105,456				111,248				155,215				117,976				NM				NM
Loans, net of unearned income			19,989,319				19,090,074				19,589,520				19,555,787				18,589,337				5	%			8	%
Federal funds sold			34,036				31,495				50,838				27,097				40,570				8	%			(16	)%
Securities purchased under agreements to resell			657,991				835,222				613,682				802,815				881,732				(21	)%			(25	)%
Interest-bearing cash (b)			573,666				2,106,597				1,060,034				219,834				321,743				(73	)%			78	%
Trading securities			1,315,891				1,167,310				897,071				1,320,535				1,162,959				13	%			13	%
Total earning assets			26,963,266				27,289,786				26,280,239				26,123,217				25,137,893				(1	)%			7	%
Cash and due from banks			387,053				369,290				373,274				327,639				283,648				5	%			36	%
Fixed income receivables (c)			127,724				168,315				57,411				91,997				219,939				(24	)%			(42	)%
Goodwill (a)			236,335				191,371				191,371				191,371				191,307				23	%			24	%
Other intangible assets, net (a)			45,121				19,785				21,017				22,317				23,616				NM				91	%
Premises and equipment, net			292,463				290,497				289,385				279,178				279,676				1	%			5	%
Real estate acquired by foreclosure			11,901				15,144				16,237				18,945				20,053				(21	)%			(41	)%
Allowance for loan losses			(197,257	)			(201,968	)			(202,068	)			(201,557	)			(199,807	)			(2	)%			(1	)%
Derivative assets			91,653				98,120				121,654				160,736				196,989				(7	)%			(53	)%
Other assets			1,411,697				1,378,260				1,406,711				1,435,379				1,387,756				2	%			2	%
Total assets		$	29,369,956			$	29,618,600			$	28,555,231			$	28,449,222			$	27,541,070				(1	)%			7	%
Liabilities and Equity:
Deposits:
Consumer interest		$	9,429,788			$	9,367,537			$	8,943,616			$	8,577,214			$	8,494,119				1	%			11	%
Commercial interest			3,285,931				3,275,599				2,943,545				2,743,474				3,078,789				*				7	%
Market-indexed (d)			3,315,045				4,481,085				4,844,608				4,363,240				3,372,537				(26	)%			(2	)%
Total interest-bearing deposits			16,030,764				17,124,221				16,731,769				15,683,928				14,945,445				(6	)%			7	%
Noninterest-bearing deposits			6,302,585				6,355,620				5,940,594				5,890,252				5,684,732				(1	)%			11	%
Total deposits			22,333,349				23,479,841				22,672,363				21,574,180				20,630,177				(5	)%			8	%
Federal funds purchased			314,892				504,805				414,207				538,284				508,669				(38	)%			(38	)%
Securities sold under agreements to repurchase			743,684				406,354				453,053				341,998				451,129				83	%			65	%
Trading liabilities			555,793				848,190				561,848				702,226				789,540				(34	)%			(30	)%
Other short-term borrowings (e)			1,044,658				79,454				83,177				792,736				543,033				NM				92	%
Term borrowings			1,033,329				1,035,036				1,040,656				1,065,651				1,076,943					*			(4	)%
Fixed income payables (c)			28,571				21,116				21,002				68,897				90,400				35	%			(68	)%
Derivative liabilities			92,717				101,347				135,897				144,829				170,619				(9	)%			(46	)%
Other liabilities			396,075				401,997				467,944				475,839				588,636				(1	)%			(33	)%
Total liabilities			26,543,068				26,878,140				25,850,147				25,704,640				24,849,146				(1	)%			7	%
Equity:
Common stock			146,336				146,177				146,015				145,772				145,012					*			1	%
Capital surplus			1,395,797				1,391,777				1,386,636				1,376,319				1,362,528					*			2	%
Undivided profits			1,131,162				1,061,409				1,029,032				992,264				945,663				7	%			20	%
Accumulated other comprehensive loss, net			(237,462	)			(249,958	)			(247,654	)			(160,828	)			(152,334	)			(5	)%			56	%
Preferred stock			95,624				95,624				95,624				95,624				95,624					*				*
Noncontrolling interest (f)			295,431				295,431				295,431				295,431				295,431					*				*
Total equity			2,826,888				2,740,460				2,705,084				2,744,582				2,691,924				3	%			5	%
Total liabilities and equity		$	29,369,956			$	29,618,600			$	28,555,231			$	28,449,222			$	27,541,070				(1	)%			7	%

NM - Not meaningful

*Amount is less than one percent.

(a)	2Q17 increase driven by the Coastal acquisition.

(b)	Includes excess balances held at Fed; 1Q17 increase largely driven by an inflow of customer deposits; 2Q17 decrease due to loan growth and the Coastal acquisition.
(c)	Period-end balances fluctuate based on the level of pending unsettled trades.

(d)	Market-indexed deposits are tied to an index not administered by FHN and are comprised of insured network deposits, correspondent banking deposits, and trust/sweep deposits.

(e)	2Q17 increase related to higher FHLB borrowings as a result of increased loan demand; 4Q16 decrease due to repayment of FHLB borrowings as a result of an inflow of deposits.
(f)	Consists of preferred stock of subsidiaries.

FHN CONSOLIDATED AVERAGE BALANCE SHEET

Quarterly, Unaudited

 

																						2Q17 Changes vs.
(Thousands)		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Assets:
Earning assets:
Loans, net of unearned income:
Commercial, financial, and industrial (C&I)		$	11,830,942			$	11,381,258			$	11,987,562			$	11,281,691			$	10,451,954				4	%			13	%
Commercial real estate			2,175,733				2,176,355				2,089,314				1,997,121				1,901,592					*			14	%
Consumer real estate			4,431,591				4,491,786				4,545,646				4,601,420				4,662,172				(1	)%			(5	)%
Permanent mortgage			408,202				415,916				429,914				436,952				435,521				(2	)%			(6	)%
Credit card and other			355,123				348,123				361,311				362,166				360,874				2	%			(2	)%
Total loans, net of unearned income (a)			19,201,591				18,813,438				19,413,747				18,679,350				17,812,113				2	%			8	%
Loans held-for-sale (b)			320,698				110,726				127,484				132,434				114,859				NM				NM
Investment securities:
U.S. treasuries			100				100				100				100				100					*				*
U.S. government agencies			3,755,818				3,735,472				3,810,207				3,844,103				3,814,059				1	%			(2	)%
States and municipalities			—				4,350				4,344				4,516				5,830				NM				NM
Corporate bonds			10,000				10,000				10,000				10,000				10,000					*				*
Other			188,229				186,670				186,452				186,632				186,812				1	%			1	%
Total investment securities			3,954,147				3,936,592				4,011,103				4,045,351				4,016,801					*			(2	)%
Trading securities			1,283,212				929,545				1,283,407				1,155,776				1,269,909				38	%			1	%
Other earning assets:
Federal funds sold			36,936				17,015				19,323				28,049				20,825				NM				77	%
Securities purchased under agreements to resell			833,253				691,469				792,156				808,861				891,973				21	%			(7	)%
Interest-bearing cash (c)			970,853				2,117,498				711,485				491,164				475,881				(54	)%			NM
Total other earning assets			1,841,042				2,825,982				1,522,964				1,328,074				1,388,679				(35	)%			33	%
Total earning assets			26,600,690				26,616,283				26,358,705				25,340,985				24,602,361					*			8	%
Allowance for loan losses			(200,534	)			(202,618	)			(201,306	)			(200,654	)			(201,622	)			(1	)%			(1	)%
Cash and due from banks			350,832				367,136				334,168				320,549				310,691				(4	)%			13	%
Fixed income receivables			64,779				41,688				83,019				75,255				73,029				55	%			(11	)%
Premises and equipment, net			291,769				289,202				282,849				278,042				275,206				1	%			6	%
Derivative assets			74,974				84,419				138,451				170,546				147,561				(11	)%			(49	)%
Other assets			1,693,840				1,609,996				1,640,781				1,624,979				1,621,322				5	%			4	%
Total assets		$	28,876,350			$	28,806,106			$	28,636,667			$	27,609,702			$	26,828,548					*			8	%
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Consumer interest		$	9,330,990			$	9,003,550			$	8,641,507			$	8,550,172			$	8,530,477				4	%			9	%
Commercial interest			3,086,139				3,097,922				2,819,980				2,780,360				2,821,130				*	%			9	%
Market-indexed (d)			3,809,281				4,666,292				4,787,912				3,894,108				3,246,815				(18	)%			17	%
Total interest-bearing deposits			16,226,410				16,767,764				16,249,399				15,224,640				14,598,422				(3	)%			11	%
Federal funds purchased			435,854				552,820				528,266				598,666				600,381				(21	)%			(27	)%
Securities sold under agreements to repurchase			616,837				419,131				378,837				387,486				490,449				47	%			26	%
Trading liabilities			762,667				642,456				745,011				752,270				828,629				19	%			(8	)%
Other short-term borrowings (e)			221,472				80,939				243,527				252,048				184,602				NM				20	%
Term borrowings			1,034,020				1,039,719				1,064,206				1,075,039				1,072,393				(1	)%			(4	)%
Total interest-bearing liabilities			19,297,260				19,502,829				19,209,246				18,290,149				17,774,876				(1	)%			9	%
Noninterest-bearing deposits			6,280,472				6,051,510				6,039,025				5,874,857				5,654,446				4	%			11	%
Fixed income payables			36,083				22,843				63,745				44,600				30,872				58	%			17	%
Derivative liabilities			85,119				84,928				123,460				146,063				129,260					*			(34	)%
Other liabilities			399,247				421,328				454,363				535,714				583,606				(5	)%			(32	)%
Total liabilities			26,098,181				26,083,438				25,889,839				24,891,383				24,173,060					*			8	%
Equity:
Common stock			146,246				146,098				145,902				145,362				145,226					*			1	%
Capital surplus			1,392,718				1,389,062				1,380,843				1,369,708				1,367,468					*			2	%
Undivided profits			1,085,326				1,044,388				1,015,742				967,872				924,822				4	%			17	%
Accumulated other comprehensive loss, net			(237,176	)			(247,935	)			(186,714	)			(155,678	)			(173,083	)			(4	)%			37	%
Preferred stock			95,624				95,624				95,624				95,624				95,624					*				*
Noncontrolling interest (f)			295,431				295,431				295,431				295,431				295,431					*				*
Total equity			2,778,169				2,722,668				2,746,828				2,718,319				2,655,488				2	%			5	%
Total liabilities and equity		$	28,876,350			$	28,806,106			$	28,636,667			$	27,609,702			$	26,828,548					*			8	%

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

NM - Not meaningful

*Amount is less than one percent.

(a)	Includes loans on nonaccrual status.

(b)	2Q17 increase driven by the Coastal acquisition.

(c)	Includes excess balances held at Fed; 1Q17 increase largely driven by an inflow of customer deposits; 2Q17 decrease due to loan growth and the Coastal acquisition.
(d)	Market-indexed deposits are tied to an index not administered by FHN and are comprised of insured network deposits, correspondent banking deposits, and trust/sweep deposits.

(e)	2Q17, 4Q16, 3Q16 and 2Q16 include higher FHLB borrowings as a result of increased loan demand.
(f)	Consists of preferred stock of subsidiaries.

FHN CONSOLIDATED NET INTEREST INCOME (a)

Quarterly, Unaudited

 

																						2Q17 Changes vs.
(Thousands)		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Interest Income:
Loans, net of unearned income (b)		$	195,162			$	183,031			$	187,158			$	176,511			$	165,550				7	%			18	%
Loans held-for-sale			3,510				1,283				1,602				1,445				1,198				NM				NM
Investment securities:
U.S. government agencies			24,122				24,221				23,110				22,517				22,801					*			6	%
States and municipalities			—				101				102				102				106				NM				NM
Corporate bonds			132				131				131				131				132				1	%				*
Other			1,535				1,414				1,479				1,138				1,152				9	%			33	%
Total investment securities			25,789				25,867				24,822				23,888				24,191					*			7	%
Trading securities			9,846				6,602				8,616				7,110				8,374				49	%			18	%
Other earning assets:
Federal funds sold			146				54				52				70				57				NM				NM
Securities purchased under agreements to resell (c)			1,442				590				(186	)			169				322				NM				NM
Interest-bearing cash			2,456				4,235				1,027				604				574				(42	)%			NM
Total other earning assets			4,044				4,879				893				843				953				(17	)%			NM
Interest income		$	238,351			$	221,662			$	223,091			$	209,797			$	200,266				8	%			19	%
Interest Expense:
Interest-bearing deposits:
Consumer interest		$	5,448			$	3,852			$	2,926			$	2,871			$	3,032				41	%			80	%
Commercial interest			4,797				3,927				3,102				2,732				2,621				22	%			83	%
Market-indexed (d)			8,941				8,407				5,968				4,424				3,493				6	%			NM
Total interest-bearing deposits			19,186				16,186				11,996				10,027				9,146				19	%			NM
Federal funds purchased			1,106				1,056				731				779				762				5	%			45	%
Securities sold under agreements to repurchase			1,081				89				47				90				138				NM				NM
Trading liabilities			4,203				3,781				3,848				3,331				3,782				11	%			11	%
Other short-term borrowings			716				247				373				385				303				NM				NM
Term borrowings			8,348				7,744				7,351				7,165				6,981				8	%			20	%
Interest expense			34,640				29,103				24,346				21,777				21,112				19	%			64	%
Net interest income - tax equivalent basis			203,712				192,559				198,745				188,020				179,154				6	%			14	%
Fully taxable equivalent adjustment			(3,010	)			(2,851	)			(3,194	)			(2,825	)			(2,890	)			(6	)%			(4	)%
Net interest income		$	200,701			$	189,708			$	195,551			$	185,195			$	176,264				6	%			14	%

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

NM - Not meaningful

(a)	Net interest income adjusted to a fully taxable equivalent (“FTE”) basis assuming a statutory federal income tax of 35 percent and, where applicable, state income taxes.

(b)	Includes interest on loans in nonaccrual status.

(c)	4Q16 driven by negative market rates on reverse repurchase agreements.
(d)	Market-indexed deposits are tied to an index not administered by FHN and are comprised of insured network deposits, correspondent banking deposits, and trust/sweep deposits.

FHN CONSOLIDATED AVERAGE BALANCE SHEET: YIELDS AND RATES

Quarterly, Unaudited

 

			2Q17				1Q17				4Q16				3Q16				2Q16
Assets:
Earning assets (a)
Loans, net of unearned income (b)
Commercial loans			4.03	%			3.86	%			3.75	%			3.63	%			3.58	%
Consumer loans			4.21				4.13				4.06				4.08				4.08
Total loans, net of unearned income (c)			4.08				3.94				3.84				3.76				3.74
Loans held-for-sale			4.38				4.64				5.03				4.36				4.17
Investment securities:
U.S. government agencies			2.57				2.59				2.43				2.34				2.39
States and municipalities			—				9.33				9.39				9.01				7.27
Corporate bonds			5.25				5.25				5.25				5.25				5.25
Other			3.10				3.03				3.17				2.44				2.47
Total investment securities			2.61				2.63				2.48				2.36				2.41
Trading securities			3.07				2.84				2.69				2.46				2.64
Other earning assets:
Federal funds sold			1.58				1.28				1.07				0.99				1.11
Securities purchased under agreements to resell (d)			0.69				0.35				(0.09	)			0.08				0.15
Interest-bearing cash			1.02				0.81				0.57				0.49				0.48
Total other earning assets			0.88				0.70				0.23				0.25				0.28
Interest income/total earning assets			3.59	%			3.37	%			3.37	%			3.30	%			3.27	%
Liabilities:
Interest-bearing liabilities:
Interest-bearing deposits:
Consumer interest			0.23	%			0.17	%			0.13	%			0.13	%			0.14	%
Commercial interest			0.62				0.51				0.44				0.39				0.37
Market-indexed (e)			0.94				0.73				0.50				0.45				0.43
Total interest-bearing deposits			0.47				0.39				0.29				0.26				0.25
Federal funds purchased			1.02				0.77				0.55				0.52				0.51
Securities sold under agreements to repurchase			0.70				0.09				0.05				0.09				0.11
Trading liabilities			2.21				2.39				2.06				1.76				1.84
Other short-term borrowings			1.30				1.24				0.61				0.61				0.66
Term borrowings (f)			3.23				2.98				2.76				2.67				2.60
Interest expense/total interest-bearing liabilities			0.72				0.60				0.51				0.47				0.48
Net interest spread			2.87	%			2.77	%			2.86	%			2.83	%			2.79	%
Effect of interest-free sources used to fund earning assets			0.20				0.15				0.14				0.13				0.13
Net interest margin			3.07	%			2.92	%			3.00	%			2.96	%			2.92	%

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

Yields are adjusted to a FTE basis assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

(a)	Earning assets yields are expressed net of unearned income.

(b)	Includes loan fees and cash basis interest income.

(c)	Includes loans on nonaccrual status.

(d)	4Q16 driven by negative market rates on reverse repurchase agreements.
(e)	Market-indexed deposits are tied to an index not administered by FHN and are comprised of insured network deposits, correspondent banking deposits, and trust/sweep deposits.

(f)	Rates are expressed net of unamortized debenture cost for term borrowings.

FHN CAPITAL HIGHLIGHTS

Quarterly, Unaudited

 

																						2Q17 Changes vs.
(Dollars and shares in thousands)		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Common equity tier 1 capital (a)(b)		$	2,418,579			$	2,409,219			$	2,377,987			$	2,326,207			$	2,260,722					*			7	%
Tier 1 capital (a)(b)			2,700,459				2,680,869				2,671,871				2,615,449				2,538,876				1	%			6	%
Total capital (a)			2,943,878				2,926,292				2,926,010				2,868,437				2,788,558				1	%			6	%
Risk-weighted assets (“RWA”) (a)(b)			24,658,985				23,623,224				23,914,158				23,716,102				22,503,305				4	%			10	%
Average assets for leverage (a)(b)			28,791,925				28,805,253				28,581,251				27,481,309				26,715,209					*			8	%
Common equity tier 1 ratio (a)(b)			9.81	%			10.20	%			9.94	%			9.81	%			10.05	%
Tier 1 ratio (a)(b)			10.95	%			11.35	%			11.17	%			11.03	%			11.28	%
Total capital ratio (a)			11.94	%			12.39	%			12.24	%			12.09	%			12.39	%
Leverage ratio (a)(b)			9.38	%			9.31	%			9.35	%			9.52	%			9.50	%
Total equity to total assets			9.63	%			9.25	%			9.47	%			9.65	%			9.77	%
Tangible common equity/tangible assets (“TCE/TA”)(c)			7.41	%			7.27	%			7.42	%			7.58	%			7.63	%
Period-end shares outstanding			234,135				233,883				233,624				233,235				232,019					*			1	%
Cash dividends declared per common share		$	0.09			$	0.09			$	0.07			$	0.07			$	0.07					*			29	%
Book value per common share		$	10.40			$	10.05			$	9.90			$	10.09			$	9.92
Tangible book value per common share (c)		$	9.20			$	9.14			$	9.00			$	9.17			$	8.99
Market capitalization (millions)		$	4,078.6			$	4,326.8			$	4,674.8			$	3,552.2			$	3,197.2

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

* Amount is less than one percent.

(a)	Current quarter is an estimate.

(b)	See Glossary of Terms for definition.

(c)	TCE/TA and Tangible book value per common share are non-GAAP measures and are reconciled to Total equity to total assets (GAAP) and to Book value per common share (GAAP), respectively, in the Non-GAAP to GAAP reconciliation on page 22 of this financial supplement.

FHN BUSINESS SEGMENT HIGHLIGHTS

Quarterly, Unaudited

 

																						2Q17 Changes vs.
(Thousands)		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Regional Banking
Net interest income		$	201,997			$	193,389			$	200,717			$	190,508			$	178,318				4	%			13	%
Noninterest income			64,737				58,976				63,324				65,128				61,275				10	%			6	%
Total revenues			266,734				252,365				264,041				255,636				239,593				6	%			11	%
Provision for loan losses			260				3,098				4,692				8,544				10,883				(92	)%			(98	)%
Noninterest expense (a)			152,659				148,064				160,851				145,050				164,524				3	%			(7	)%
Income before income taxes			113,815				101,203				98,498				102,042				64,186				12	%			77	%
Provision for income taxes			41,136				36,588				35,364				37,027				22,333				12	%			84	%
Net income		$	72,679			$	64,615			$	63,134			$	65,015			$	41,853				12	%			74	%
Fixed Income
Net interest income		$	4,979			$	1,151			$	2,541			$	2,411			$	3,146				NM				58	%
Noninterest income			55,205				50,822				52,061				72,073				78,083				9	%			(29	)%
Total revenues			60,184				51,973				54,602				74,484				81,229				16	%			(26	)%
Noninterest expense			54,001				48,685				48,726				59,423				62,802				11	%			(14	)%
Income before income taxes			6,183				3,288				5,876				15,061				18,427				88	%			(66	)%
Provision for income taxes			1,946				1,024				1,875				5,518				6,785				90	%			(71	)%
Net income		$	4,237			$	2,264			$	4,001			$	9,543			$	11,642				87	%			(64	)%
Corporate
Net interest income/(expense)		$	(14,995	)		$	(14,100	)		$	(17,501	)		$	(18,193	)		$	(15,847	)			(6	)%			5	%
Noninterest income			6,218				5,476				4,670				5,134				4,909				14	%			27	%
Total revenues			(8,777	)			(8,624	)			(12,831	)			(13,059	)			(10,938	)			(2	)%			20	%
Noninterest expense (b)			24,563				16,880				14,593				14,929				15,930				46	%			54	%
Loss before income taxes			(33,340	)			(25,504	)			(27,424	)			(27,988	)			(26,868	)			(31	)%			(24	)%
Benefit for income taxes (c)			(35,711	)			(13,058	)			(15,082	)			(16,736	)			(12,744	)			NM				NM
Net income/(loss)		$	2,371			$	(12,446	)		$	(12,342	)		$	(11,252	)		$	(14,124	)			NM				NM
Non-Strategic
Net interest income		$	8,720			$	9,268			$	9,794			$	10,469			$	10,647				(6	)%			(18	)%
Noninterest income (d)			1,513				1,665				4,022				6,210				1,247				(9	)%			21	%
Total revenues			10,233				10,933				13,816				16,679				11,894				(6	)%			(14	)%
Provision/(provision credit) for loan losses			(2,260	)			(4,098	)			(4,692	)			(4,544	)			(6,883	)			45	%			67	%
Noninterest expense (e)			(13,306	)			8,576				13,727				14,156				(16,434	)			NM				19	%
Income/(loss) before income taxes			25,799				6,455				4,781				7,067				35,211				NM				(27	)%
Provision/(benefit) for income taxes			9,882				2,500				1,851				2,738				13,642				NM				(28	)%
Net income/(loss)		$	15,917			$	3,955			$	2,930			$	4,329			$	21,569				NM				(26	)%
Total Consolidated
Net interest income		$	200,701			$	189,708			$	195,551			$	185,195			$	176,264				6	%			14	%
Noninterest income			127,673				116,939				124,077				148,545				145,514				9	%			(12	)%
Total revenues			328,374				306,647				319,628				333,740				321,778				7	%			2	%
Provision/(provision credit) for loan losses			(2,000	)			(1,000	)			—				4,000				4,000				NM				NM
Noninterest expense			217,917				222,205				237,897				233,558				226,822				(2	)%			(4	)%
Income before income taxes			112,457				85,442				81,731				96,182				90,956				32	%			24	%
Provision for income taxes			17,253				27,054				24,008				28,547				30,016				(36	)%			(43	)%
Net income		$	95,204			$	58,388			$	57,723			$	67,635			$	60,940				63	%			56	%

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

NM - Not meaningful

(a)	4Q16 includes $2.7 million of loss accruals related to legal matters; 3Q16 includes a $4.3 million reversal of loss accruals related to legal matters; 2Q16 includes $22.0 million of loss accruals related to legal matters.
(b)	2Q17 includes $6.4 million of acquisition-related expenses primarily associated with the CBF and Coastal acquisitions and a $3.2 million charitable contribution to the First Tennessee Foundation.
(c)	2Q17 decrease primarily associated with a favorable effective tax rate adjustment associated with the reversal of a capital loss deferred tax valuation allowance.
(d)	4Q16 includes a $1.5 million gain related to the reversal of a contingency accrual associated with prior sales of MSR; 3Q16 includes $4.4 million of gains primarily related to recoveries associated with prior legacy mortgage servicing sales.
(e)	2Q17 includes a $21.7 million reversal of repurchase and foreclosure provision as a result of the settlements/ recoveries of certain repurchase claims; 4Q16 includes $2.0 million of loss accruals related to legal matters; 3Q16 includes $4.5 million of loss accruals related to legal matters; 2Q16 includes a $31.4 million reversal of repurchase and foreclosure provision as a result of the settlements/recoveries of certain repurchase claims, somewhat offset by $4.0 million of loss accruals related to legal matters.

FHN REGIONAL BANKING

Quarterly, Unaudited

 

																						2Q17 Changes vs.
		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Income Statement (thousands)
Net interest income		$	201,997			$	193,389			$	200,717			$	190,508			$	178,318				4	%			13	%
Provision for loan losses			260				3,098				4,692				8,544				10,883				(92	)%			(98	)%
Noninterest income:
NSF / Overdraft fees (a)			8,726				6,316				9,707				10,076				8,905				38	%			(2	)%
Cash management fees			9,641				9,196				8,659				7,947				8,612				5	%			12	%
Debit card income			3,658				3,407				3,516				3,496				3,464				7	%			6	%
Other			4,424				4,327				4,291				4,215				4,466				2	%			(1	)%
Total deposit transactions and cash management			26,449				23,246				26,173				25,734				25,447				14	%			4	%
Brokerage, management fees and commissions			12,029				11,906				11,003				10,828				10,665				1	%			13	%
Trust services and investment management			7,713				6,680				7,056				6,900				7,239				15	%			7	%
Bankcard income			5,495				5,342				6,230				6,151				6,432				3	%			(15	)%
Other service charges			2,722				2,618				2,596				2,591				2,579				4	%			6	%
Miscellaneous revenue (b)(c)			10,329				9,184				10,266				12,924				8,913				12	%			16	%
Total noninterest income			64,737				58,976				63,324				65,128				61,275				10	%			6	%
Noninterest expense:
Employee compensation, incentives, and benefits			58,487				57,990				58,627				56,440				53,413				1	%			9	%
Other (d)			94,172				90,074				102,224				88,610				111,111				5	%			(15	)%
Total noninterest expense			152,659				148,064				160,851				145,050				164,524				3	%			(7	)%
Income before income taxes		$	113,815			$	101,203			$	98,498			$	102,042			$	64,186				12	%			77	%
PPNR (e)			113,689				104,301				103,190				110,586				75,069				9	%			51	%
Efficiency ratio (f)			57.32	%			58.67	%			60.92	%			56.74	%			68.67	%
Balance Sheet (millions)
Average loans		$	17,679			$	17,199			$	17,692			$	16,844			$	15,859				3	%			11	%
Average other earning assets			50				34				37				46				42				47	%			19	%
Total average earning assets			17,729				17,233				17,729				16,890				15,901				3	%			11	%
Total average deposits			20,139				19,660				19,022				18,604				18,367				2	%			10	%
Total period-end deposits			20,425				20,541				19,348				18,742				18,674				(1	)%			9	%
Total period-end assets			19,333				18,329				18,771				18,562				17,434				5	%			11	%
Net interest margin (g)			4.63	%			4.61	%			4.57	%			4.55	%			4.57	%
Net interest spread			3.62				3.57				3.52				3.46				3.44
Loan yield			3.88				3.78				3.68				3.61				3.59
Deposit average rate			0.26				0.21				0.16				0.15				0.15
Key Statistics
Financial center locations			163				162				162				162				162				1	%			1	%

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

(a)	Variability is driven by changes in consumer behavior and seasonality; 1Q17 decrease driven by seasonality and a modification of billing practices.
(b)	3Q16 includes a $1.8 million gain on the sales of properties.
(c)	2Q17 includes $386 thousand of securities gains/(losses).
(d)	4Q16 includes $2.7 million of loss accruals related to legal matters; 3Q16 includes a reversal of loss accruals related to legal matters of $4.3 million; 2Q16 includes $22.0 million of loss accruals related to legal matters.
(e)	Pre-provision net revenue is not a GAAP number but is used in regulatory stress test reporting. The presentation of PPNR in this Financial Supplement follows the regulatory definition.
(f)	Noninterest expense divided by total revenue excluding securities gains/(losses).
(g)	Net interest margin is computed using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

FHN FIXED INCOME

Quarterly, Unaudited

 

																						2Q17 Changes vs.
		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Income Statement (thousands)
Net interest income (a)		$	4,979			$	1,151			$	2,541			$	2,411			$	3,146				NM				58	%
Noninterest income:
Fixed income product revenue			45,555				42,727				43,794				59,003				69,279				7	%			(34	)%
Other (b)			9,650				8,095				8,267				13,070				8,804				19	%			10	%
Total noninterest income			55,205				50,822				52,061				72,073				78,083				9	%			(29	)%
Noninterest expense			54,001				48,685				48,726				59,423				62,802				11	%			(14	)%
Income before income taxes		$	6,183			$	3,288			$	5,876			$	15,061			$	18,427				88	%			(66	)%
Efficiency ratio (c)			89.73	%			93.67	%			89.24	%			79.78	%			77.31	%
Fixed income product average daily revenue		$	723			$	689			$	718			$	922			$	1,082				5	%			(33	)%
Balance Sheet (millions)
Average trading inventory		$	1,281			$	927			$	1,281			$	1,153			$	1,267				38	%			1	%
Average other earning assets			1,071				703				818				831				893				52	%			20	%
Total average earning assets			2,352				1,630				2,099				1,984				2,160				44	%			9	%
Total period-end assets			2,745				2,395				1,817				2,516				2,540				15	%			8	%
Net interest margin (d)			0.92	%			0.33	%			0.57	%			0.55	%			0.64	%

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

NM—Not Meaningful

(a)	2Q17 increase largely due to higher net inventory positions as a result of the Coastal acquisition.
(b)	3Q16 increase driven by higher fees from loan and derivative sales.
(c)	Noninterest expense divided by total revenue.
(d)	Net interest margin is computed using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

 

FHN CORPORATE

Quarterly, Unaudited

 

																						2Q17 Changes vs.
		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Income Statement (thousands)
Net interest income/(expense)		$	(14,995	)		$	(14,100	)		$	(17,501	)		$	(18,193	)		$	(15,847	)			(6	)%			5	%
Noninterest income excluding securities gains/(losses)			6,199				5,432				4,802				5,335				4,810				14	%			29	%
Securities gains/(losses), net			19				44				(132	)			(201	)			99				(57	)%			(81	)%
Noninterest expense (a)			24,563				16,880				14,593				14,929				15,930				46	%			54	%
Loss before income taxes		$	(33,340	)		$	(25,504	)		$	(27,424	)		$	(27,988	)		$	(26,868	)			(31	)%			(24	)%
Average Balance Sheet (millions)
Average loans		$	82			$	80			$	86			$	91			$	96				3	%			(15	)%
Total earning assets		$	4,983			$	6,122			$	4,795			$	4,617			$	4,576				(19	)%			9	%
Net interest margin (b)			(1.21	)%			(0.96	)%			(1.44	)%			(1.55	)%			(1.40	)%

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

(a)

2Q17 increase primarily driven by $6.4 million of acquisition-related expenses primarily associated with the CBF and Coastal acquisitions and a $3.2 million charitable contribution, to the First Tennessee Foundation, somewhat offset by $2.2 million of deferred compensation BOLI gains; 2Q16 includes $2.5 million of negative valuation adjustments associated with derivatives related to prior sales of Visa Class B shares.

(b)

Net interest margin is computed using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.

FHN NON-STRATEGIC

Quarterly, Unaudited

 

																						2Q17 Changes vs.
		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Income Statement (thousands)
Net interest income		$	8,720			$	9,268			$	9,794			$	10,469			$	10,647				(6	)%			(18	)%
Provision/(provision credit) for loan losses			(2,260	)			(4,098	)			(4,692	)			(4,544	)			(6,883	)			45	%			67	%
Noninterest income (a)			1,513				1,665				4,022				6,210				1,247				(9	)%			21	%
Noninterest expense (b)			(13,306	)			8,576				13,727				14,156				(16,434	)			NM				19	%
Income/(loss) before income taxes		$	25,799			$	6,455			$	4,781			$	7,067			$	35,211				NM				(27	)%
Average Balance Sheet (millions)
Loans		$	1,441			$	1,535			$	1,636			$	1,744			$	1,856				(6	)%			(22	)%
Loans held-for-sale			90				93				96				100				103				(3	)%			(13	)%
Trading securities			2				2				3				3				3					*			(33	)%
Allowance for loan losses			(46	)			(48	)			(50	)			(53	)			(59	)			4	%			22	%
Other assets			34				34				37				47				46					*			(26	)%
Total assets			1,521				1,616				1,722				1,841				1,949				(6	)%			(22	)%
Net interest margin (c)			2.27	%			2.29	%			2.25	%			2.26	%			2.17	%
Efficiency ratio (d)			NM				78.44	%			99.36	%			84.87	%			NM

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

NM - Not meaningful

* Amount is less than one percent.

(a)	4Q16 includes a $1.5 million gain related to the reversal of a contingency accrual associated with prior sales of MSR; 3Q16 includes $4.4 million of gains primarily related to recoveries associated with prior legacy mortgage servicing sales.
(b)	2Q17 includes a $21.7 million reversal of repurchase and foreclosure provision as a result of the settlements/ recoveries of certain repurchase claims; 4Q16 includes $2.0 million of loss accruals related to legal matters; 3Q16 includes $4.5 million of loss accruals related to legal matters; 2Q16 includes a $31.4 million reversal of repurchase and foreclosure provision as a result of the settlements/recoveries of certain repurchase claims, somewhat offset by $4.0 million of loss accruals related to legal matters.
(c)	Net interest margin is computed using total net interest income adjusted for FTE assuming a statutory federal income tax rate of 35 percent and, where applicable, state income taxes.
(d)	Noninterest expense divided by total revenue excluding securities gains/(losses).

FHN ASSET QUALITY: CONSOLIDATED

Quarterly, Unaudited

 

																						2Q17 Changes vs.
(Dollars in thousands)		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Allowance for Loan Losses Walk-Forward
Beginning reserve		$	201,968			$	202,068			$	201,557			$	199,807			$	204,034				*				(1	)%
Provision/(provision credit) for loan losses			(2,000	)			(1,000	)			—				4,000				4,000				NM				NM
Charge-offs			(9,830	)			(8,413	)			(11,369	)			(10,362	)			(18,296	)			(17	)%			46	%
Recoveries			7,119				9,313				11,880				8,112				10,069				(24	)%			(29	)%
Ending balance		$	197,257			$	201,968			$	202,068			$	201,557			$	199,807				(2	)%			(1	)%
Reserve for unfunded commitments			5,554				5,284				5,312				4,802				5,351				5	%			4	%
Total allowance for loan losses plus reserve for unfunded commitments		$	202,811			$	207,252			$	207,380			$	206,359			$	205,158				(2	)%			(1	)%
Allowance for Loan Losses
Regional Banking		$	153,208			$	155,968			$	154,082			$	151,397			$	146,351				(2	)%			5	%
Non-Strategic			44,049				46,000				47,986				50,160				53,456				(4	)%			(18	)%
Total allowance for loan losses		$	197,257			$	201,968			$	202,068			$	201,557			$	199,807				(2	)%			(1	)%
Nonperforming Assets
Regional Banking
Nonperforming loans		$	43,012			$	49,462			$	50,653			$	50,267			$	60,754				(13	)%			(29	)%
Foreclosed real estate  (a)			3,266				4,422				5,081				5,811				7,031				(26	)%			(54	)%
Total Regional Banking		$	46,278			$	53,884			$	55,734			$	56,078			$	67,785				(14	)%			(32	)%
Non-Strategic
Nonperforming loans		$	84,959			$	92,409			$	93,808			$	100,572			$	114,947				(8	)%			(26	)%
Nonperforming loans held-for-sale after fair value adjustments			7,321				7,633				7,741				7,791				8,195				(4	)%			(11	)%
Foreclosed real estate (a)			3,772				5,837				6,154				7,867				7,119				(35	)%			(47	)%
Total Non-Strategic		$	96,052			$	105,879			$	107,703			$	116,230			$	130,261				(9	)%			(26	)%
Corporate
Nonperforming loans		$	1,819			$	1,521			$	1,186			$	1,211			$	896				20	%			NM
Total nonperforming assets (a)		$	144,149			$	161,284			$	164,623			$	173,519			$	198,942				(11	)%			(28	)%
Net Charge-Offs
Regional Banking		$	3,020			$	1,211			$	2,007			$	3,499			$	7,620				NM				(60	)%
Non-Strategic			(309	)			(2,111	)			(2,518	)			(1,249	)			607				85	%			NM
Total net charge-offs/(recoveries)		$	2,711			$	(900	)		$	(511	)		$	2,250			$	8,227				NM				(67	)%
Consolidated Key Ratios (b)
30+ Delinq. % (c)			0.27	%			0.39	%			0.34	%			0.32	%			0.32	%
NPL %			0.65				0.75				0.74				0.78				0.95
NPA %			0.68				0.80				0.80				0.85				1.03
Net charge-offs %			0.06				NM				NM				0.05				0.19
Allowance / loans %			0.99				1.06				1.03				1.03				1.07
Allowance / NPL			1.52	x			1.41	x			1.39	x			1.33	x			1.13	x
Allowance / NPA			1.44	x			1.31	x			1.29	x			1.22	x			1.05	x
Allowance / net charge-offs			18.14	x			NM				NM				22.51	x			6.04	x
Other
Loans past due 90 days or more (d)		$	37,809			$	37,156			$	38,299			$	36,562			$	34,175				2	%			11	%
Guaranteed portion (d)			15,276				14,569				14,664				13,645				13,822				5	%			11	%
Period-end loans, net of unearned income (millions)			19,989				19,090				19,590				19,556				18,589				5	%			8	%

NM - Not meaningful

* Amount is less than one percent.

(a)	Excludes foreclosed real estate from government-insured mortgages.
(b)	See Glossary of Terms for definitions of Consolidated Key Ratios.
(c)	30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
(d)	Includes loans held-for-sale.

FHN ASSET QUALITY: CONSOLIDATED

Quarterly, Unaudited

 

																						2Q17 Changes vs.
		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Key Portfolio Details
C&I
Period-end loans ($ millions)		$	12,598			$	11,704			$	12,148			$	12,118			$	11,179				8	%			13	%
30+ Delinq. % (a) (b)			0.03	%			0.17	%			0.08	%			0.05	%			0.04	%
NPL %			0.20				0.26				0.27				0.25				0.27
Charge-offs % (qtr. annualized)			0.04				NM				NM				0.04				0.24
Allowance / loans %			0.73	%			0.80	%			0.74	%			0.72	%			0.72	%
Allowance / net charge-offs			18.21	x			NM				NM				17.23	x			3.21	x
Commercial Real Estate
Period-end loans ($ millions)		$	2,212			$	2,173			$	2,136			$	2,066			$	1,969				2	%			12	%
30+ Delinq. % (a)			0.01	%			0.03	%			0.01	%			0.18	%			0.15	%
NPL %			0.07				0.11				0.13				0.17				0.40
Charge-offs % (qtr. annualized)			NM				NM				0.09				NM				NM
Allowance / loans %			1.38	%			1.42	%			1.59	%			1.57	%			1.54	%
Allowance / net charge-offs			NM				NM				17.56	x			NM				NM
Consumer Real Estate
Period-end loans ($ millions)		$	4,417			$	4,457			$	4,524			$	4,578			$	4,641				(1	)%			(5	)%
30+ Delinq. % (a)			0.81	%			0.86	%			0.93	%			0.86	%			0.80	%
NPL %			1.70				1.83				1.83				1.95				2.31
Charge-offs % (qtr. annualized)			NM				NM				NM				NM				0.04
Allowance / loans %			1.04	%			1.11	%			1.11	%			1.16	%			1.27	%
Allowance / net charge-offs			NM				NM				NM				NM				29.40	x
Permanent Mortgage
Period-end loans ($ millions)		$	408			$	409			$	423			$	436			$	439				*				(7	)%
30+ Delinq. % (a)			2.57	%			2.57	%			2.36	%			2.46	%			2.21	%
NPL %			6.81				7.05				6.42				6.67				6.97
Charge-offs % (qtr. annualized)			0.35				NM				NM				0.12				NM
Allowance / loans %			4.02	%			3.88	%			3.85	%			3.80	%			4.01	%
Allowance / net charge-offs			11.52	x			NM				NM				31.11	x			NM
Credit Card and Other
Period-end loans ($ millions)		$	354			$	347			$	359			$	358			$	361				2	%			(2	)%
30+ Delinq. % (a)			0.92	%			1.00	%			1.17	%			1.04	%			1.19	%
NPL %			0.04				0.04				0.04				0.04				0.20
Charge-offs % (qtr. annualized)			2.71				3.08				3.25				2.95				2.73
Allowance / loans %			3.38	%			3.58	%			3.39	%			3.48	%			3.30	%
Allowance / net charge-offs			1.24	x			1.16	x			1.04	x			1.17	x			1.21	x

NM - Not meaningful

* Amount is less than one percent.

(a)	30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
(b)	1Q17 increase was primarily driven by a few credits within the C&I portfolio, all of which were favorably resolved in second quarter 2017.

FHN ASSET QUALITY: REGIONAL BANKING

Quarterly, Unaudited

 

																						2Q17 Changes vs.
		2Q17				1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Total Regional Banking
Period-end loans ($ millions)		$	18,529			$	17,537			$	17,935			$	17,789			$	16,703				6	%			11	%
30+ Delinq. % (a)			0.13	%			0.24	%			0.18	%			0.17	%			0.16	%
NPL %			0.23				0.28				0.28				0.28				0.36
Charge-offs % (qtr. annualized)			0.07				0.03				0.05				0.08				0.19
Allowance / loans %			0.83	%			0.89	%			0.86	%			0.85	%			0.88	%
Allowance / net charge-offs			12.65	x			31.75	x			19.30	x			10.88	x			4.78	x
Key Portfolio Details
C&I
Period-end loans ($ millions)		$	12,178			$	11,284			$	11,728			$	11,698			$	10,759				8	%			13	%
30+ Delinq. % (a) (b)			0.03	%			0.18	%			0.08	%			0.05	%			0.04	%
NPL %			0.17				0.24				0.24				0.22				0.24
Charge-offs % (qtr. annualized)			0.04				NM				NM				0.05				0.25
Allowance / loans %			0.75	%			0.81	%			0.75	%			0.73	%			0.74	%
Allowance / net charge-offs			17.85	x			NM				NM				16.76	x			3.23	x
Commercial Real Estate
Period-end loans ($ millions)		$	2,212			$	2,173			$	2,136			$	2,066			$	1,969				2	%			12	%
30+ Delinq. % (a)			0.01	%			0.03	%			0.01	%			0.18	%			0.15	%
NPL %			0.07				0.11				0.13				0.17				0.40
Charge-offs % (qtr. annualized)			NM				NM				0.11				NM				NM
Allowance / loans %			1.38	%			1.42	%			1.59	%			1.57	%			1.54	%
Allowance / net charge-offs			NM				NM				14.28	x			NM				NM
Consumer Real Estate
Period-end loans ($ millions)		$	3,695			$	3,655			$	3,643			$	3,608			$	3,577				1	%			3	%
30+ Delinq. % (a)			0.46	%			0.48	%			0.49	%			0.46	%			0.40	%
NPL %			0.54				0.55				0.52				0.57				0.73
Charge-offs % (qtr. annualized)			NM				NM				—				0.01				NM
Allowance / loans %			0.48	%			0.53	%			0.52	%			0.56	%			0.68	%
Allowance / net charge-offs			NM				NM				NM				57.14	x			NM
Credit Card, Permanent Mortgage, and Other
Period-end loans ($ millions)		$	444			$	425			$	428			$	417			$	398				4	%			12	%
30+ Delinq. % (a)			0.81	%			0.90	%			1.08	%			0.97	%			1.16	%
NPL %			0.09				0.09				0.09				0.10				0.10
Charge-offs % (qtr. annualized)			2.21				2.55				2.79				2.64				2.54
Allowance / loans %			3.13	%			3.36	%			3.09	%			3.19	%			3.07	%
Allowance / net charge-offs			1.44	x			1.33	x			1.12	x			1.23	x			1.25	x
ASSET QUALITY: CORPORATE
Permanent Mortgage
Period-end loans ($ millions)		$	63			$	67			$	71			$	79			$	85				(6	)%			(26	)%
30+ Delinq. % (a)			6.52	%			4.25	%			4.37	%			4.37	%			4.92	%
NPL %			2.90				2.25				1.66				1.54				1.06
Charge-offs % (qtr. annualized)			NM				NM				NM				NM				NM
Allowance / loans %			NM				NM				NM				NM				NM
Allowance / net charge-offs			NM				NM				NM				NM				NM

NM - Not meaningful

(a)	30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.
(b)	1Q17 increase was primarily driven by a few credits within the C&I portfolio, all of which were favorably resolved in second quarter 2017.

FHN ASSET QUALITY: NON-STRATEGIC

Quarterly, Unaudited

 

																						2Q17 Changes vs.
			2Q17			1Q17				4Q16				3Q16				2Q16				1Q17				2Q16
Total Non-Strategic
Period-end loans ($ millions)		$	1,397			$	1,486			$	1,584			$	1,688			$	1,801				(6	)%			(22	)%
30+ Delinq. % (a)			1.79	%			1.89	%			1.94	%			1.76	%			1.56	%
NPL %			6.08				6.22				5.92				5.96				6.38
Charge-offs % (qtr. annualized)			NM				NM				NM				NM				0.13
Allowance / loans %			3.15	%			3.10	%			3.03	%			2.97	%			2.97	%
Allowance / net charge-offs			NM				NM				NM				NM				21.90	x
Key Portfolio Details
Commercial
Period-end loans ($ millions)		$	420			$	420			$	420			$	420			$	420					*				*
30+ Delinq. % (a)			—	%			—	%			—	%			—	%			—	%
NPL %			0.95				0.97				0.98				0.99				1.00
Charge-offs % (qtr. annualized)			NM				NM				NM				NM				—
Allowance / loans %			0.34	%			0.35	%			0.33	%			0.33	%			0.33	%
Allowance / net charge-offs			NM				NM				NM				NM				114.92	x
Consumer Real Estate
Period-end loans ($ millions)		$	722			$	802			$	881			$	970			$	1,064				(10	)%			(32	)%
30+ Delinq. % (a)			2.62	%			2.60	%			2.76	%			2.34	%			2.16	%
NPL %			7.64				7.65				7.26				7.09				7.59
Charge-offs % (qtr. annualized)			NM				NM				NM				NM				0.26
Allowance / loans %			3.90	%			3.80	%			3.56	%			3.40	%			3.27	%
Allowance / net charge-offs			NM				NM				NM				NM				12.14	x
Permanent Mortgage
Period-end loans ($ millions)		$	249			$	258			$	275			$	290			$	308				(3	)%			(19	)%
30+ Delinq. % (a)			2.38	%			2.78	%			2.29	%			2.36	%			1.66	%
NPL %			10.30				10.45				9.32				9.48				9.51
Charge-offs % (qtr. annualized)			0.56				NM				NM				0.18				NM
Allowance / loans %			5.80	%			5.45	%			5.49	%			5.36	%			5.53	%
Allowance / net charge-offs			10.13	x			NM				NM				29.16	x			NM
Other Consumer
Period-end loans ($ millions)		$	6			$	6			$	8			$	8			$	9					*			(33	)%
30+ Delinq. % (a)			1.95	%			1.84	%			1.73	%			1.62	%			1.06	%
NPL %			1.93				1.90				1.82				1.83				7.98
Charge-offs % (qtr. annualized)			NM				NM				NM				NM				1.15
Allowance / loans %			0.35	%			0.08	%			2.26	%			2.50	%			2.83	%
Allowance / net charge-offs			NM				NM				NM				NM				2.41	x

NM - Not meaningful

* Amount is less than one percent.

(a)	30+ Delinquency % includes all accounts delinquent more than one month and still accruing interest.

FHN: PORTFOLIO METRICS
Unaudited
C&I Portfolio: $12.6 Billion (63.0% of Total Loans) as of June 30, 2017
		% OS
General Corporate, Commercial, and Business Banking Loans			78	%
Loans to Mortgage Companies			17	%
Bank Holding Company Loans			3	%
Trust Preferred Loans			2	%

 

Consumer Real Estate (primarily Home Equity) Portfolio: $4.4 Billion (22.1% of Total Loans)

 

Origination LTV and FICO for Portfolio as of June 30, 2017		Loan-to-Value
(excludes whole loan insurance)		<=60%				>60% - <=80%				>80% - 90%				>90%
FICO score greater than or equal to 740			11	%			24	%			16	%			14	%
FICO score 720-739			1	%			4	%			4	%			3	%
FICO score 700-719			1	%			3	%			3	%			2	%
FICO score 660-699			1	%			3	%			3	%			2	%
FICO score 620-659			—	%			1	%			1	%			1	%
FICO score less than 620			—	%			1	%			—	%			1	%

 

Origination LTV and FICO for Portfolio - Regional Bank as of June 30, 2017		Loan-to-Value
(excludes whole loan insurance)		<=60%				>60% - <=80%				>80% - 90%				>90%
FICO score greater than or equal to 740			11	%			25	%			16	%			16	%
FICO score 720-739			1	%			4	%			3	%			3	%
FICO score 700-719			1	%			3	%			2	%			2	%
FICO score 660-699			1	%			3	%			3	%			2	%
FICO score 620-659			—	%			1	%			1	%			1	%
FICO score less than 620			—	%			—	%			—	%			1	%

 

Origination LTV and FICO for Portfolio - Non-Strategic as of June 30, 2017		Loan-to-Value
(excludes whole loan insurance)		<=60%				>60% - <=80%				>80% - 90%				>90%
FICO score greater than or equal to 740			7	%			19	%			15	%			5	%
FICO score 720-739			2	%			5	%			6	%			2	%
FICO score 700-719			2	%			6	%			6	%			2	%
FICO score 660-699			2	%			5	%			5	%			4	%
FICO score 620-659			—	%			1	%			2	%			1	%
FICO score less than 620			—	%			1	%			—	%			2	%

 

Consumer Real Estate Portfolio Detail:

 

				Origination Characteristics
Vintage		Balances ($B)		W/A Age (mo.)			CLTV			FICO					% TN				% 1st lien
pre-2008		$0.9		138			80	%		725					21	%			21	%
2008		0.2		109			75	%		748					73	%			50	%
2009		0.1		97			72	%		745					86	%			59	%
2010		0.1		83			78	%		754					93	%			71	%
2011		0.2		70			76	%		758					89	%			84	%
2012		0.4		60			77	%		764					89	%			92	%
2013		0.4		49			78	%		755					86	%			86	%
2014		0.4		36			82	%		757					86	%			90	%
2015		0.6		23			80	%		758					81	%			88	%
2016		0.8		11			80	%		760					84	%			90	%
2017		0.3		3			83	%		760					78	%			90	%
Total		$4.4		59			79	%		751	(a)				71	%			73	%

(a)	751 average portfolio origination FICO; 749 weighted average portfolio FICO (refreshed).

FHN NON-GAAP TO GAAP RECONCILIATION

Quarterly, Unaudited

 

 

(Dollars and shares in thousands, except per share data)			2Q17				1Q17				4Q16				3Q16				2Q16
Tangible Common Equity (Non-GAAP)
(A) Total equity (GAAP)		$	2,826,888			$	2,740,460			$	2,705,084			$	2,744,582			$	2,691,924
Less: Noncontrolling interest (a)			295,431				295,431				295,431				295,431				295,431
Less: Preferred stock (a)			95,624				95,624				95,624				95,624				95,624
(B) Total common equity		$	2,435,833			$	2,349,405			$	2,314,029			$	2,353,527			$	2,300,869
Less: Intangible assets (GAAP) (b)			281,456				211,156				212,388				213,688				214,923
(C) Tangible common equity (Non-GAAP)		$	2,154,377			$	2,138,249			$	2,101,641			$	2,139,839			$	2,085,946
Tangible Assets (Non-GAAP)
(D) Total assets (GAAP)		$	29,369,956			$	29,618,600			$	28,555,231			$	28,449,222			$	27,541,070
Less: Intangible assets (GAAP) (b)			281,456				211,156				212,388				213,688				214,923
(E) Tangible assets (Non-GAAP)		$	29,088,500			$	29,407,444			$	28,342,843			$	28,235,534			$	27,326,147
Average Tangible Common Equity (Non-GAAP)
(F) Average total equity (GAAP)		$	2,778,169			$	2,722,668			$	2,746,828			$	2,718,319			$	2,655,488
Less: Average noncontrolling interest (a)			295,431				295,431				295,431				295,431				295,431
Less: Average preferred stock (a)			95,624				95,624				95,624				95,624				95,624
(G) Total average common equity		$	2,387,114			$	2,331,613			$	2,355,773			$	2,327,264			$	2,264,433
Less: Average intangible assets (GAAP) (b)			281,326				211,757				213,019				214,260				215,556
(H) Average tangible common equity (Non-GAAP)		$	2,105,788			$	2,119,856			$	2,142,754			$	2,113,004			$	2,048,877
Annualized Net Income Available to Common Shareholders
(I) Net income available to common shareholders (annualized) (GAAP)		$	364,206			$	219,073			$	212,017			$	251,434			$	227,395
Period-end Shares Outstanding
(J) Period-end shares outstanding			234,135				233,883				233,624				233,235				232,019
Ratios
(I)/(G) Return on average common equity (“ROE”) (GAAP)			15.26	%			9.40	%			9.00	%			10.80	%			10.04	%
(I)/(H) Return on average tangible common equity (“ROTCE”) (Non-GAAP)			17.30	%			10.33	%			9.89	%			11.90	%			11.10	%
(A)/(D) Total equity to total assets (GAAP)			9.63	%			9.25	%			9.47	%			9.65	%			9.77	%
(C)/(E) Tangible common equity to tangible assets (“TCE/TA”) (Non-GAAP)			7.41	%			7.27	%			7.42	%			7.58	%			7.63	%
(B)/(J) Book value per common share (GAAP)		$	10.40			$	10.05			$	9.90			$	10.09			$	9.92
(C)/(J) Tangible book value per common share (Non-GAAP)		$	9.20			$	9.14			$	9.00			$	9.17			$	8.99

(a)	Included in Total equity on the Consolidated Balance Sheet.
(b)	Includes goodwill and other intangible assets, net of amortization.

FHN GLOSSARY OF TERMS

 

 

 

Average Assets for Leverage: The amount of assets a company uses to calculate the leverage ratio, which includes average total assets less disallowed portions of goodwill, other intangibles, and deferred tax assets, as well as certain other regulatory adjustments made to tier 1 capital.

 

Common Equity Tier 1 Ratio: Ratio consisting of common equity adjusted for certain unrealized gains/(losses) on available-for-sale securities, less disallowed portions of goodwill, other intangibles, and deferred tax assets as well as certain other regulatory deductions divided by risk-weighted assets.

 

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

 

Fully Taxable Equivalent (“FTE”): Reflects the amount of tax-exempt income adjusted to a level that would yield the same after-tax income had that income been subject to taxation.

 

Market-Indexed Deposits: Deposits with pricing tied to an index not administered by FHN. For FHN these are comprised of insured network deposits, correspondent banking deposits, and trust/sweep deposits.

 

Risk-Weighted Assets: A regulatory risk-based calculation that takes into account the broad differences in risks among a banking organization’s assets and off-balance sheet financial instruments.

 

Tier 1 Capital Ratio: Ratio consisting of shareholders’ equity adjusted for certain unrealized gains/(losses) on available-for-sale securities, plus qualifying portions of noncontrolling interests, less disallowed portions of goodwill, other intangible assets, and deferred tax assets as well as certain other regulatory deductions divided by risk-weighted assets.

 

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.

 

Key Ratios

 

Return on Average Assets: Ratio is annualized net income to average total assets.

 

Return on Average Common Equity: Ratio is annualized net income available to common shareholders to average common equity.

 

Return on Average Tangible Common Equity: Ratio is annualized net income available to common shareholders to average tangible common equity.

 

Fee Income to Total Revenue: Ratio is fee income excluding securities gains/(losses) to total revenue excluding securities gains/(losses).

 

Efficiency Ratio: Ratio is noninterest expense to total revenue excluding securities gains/(losses).

 

Leverage Ratio: Ratio is tier 1 capital to average assets for leverage.

 

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.