FIRST QUARTER 2007
FINANCIAL SUPPLEMENT
The following supplement is provided to assist in your financial analysis.
If you need further information, please contact:
Dave Miller, Investor Relations
901-523-4162
dwmiller@firsthorizon.com
First Horizon National Corporation
1Q 2007 Financial Supplement
Dear Investor,
In conjunction with the release of First Horizon National Corporation’s first quarter results for 2007, we have prepared this financial supplement to assist investors in understanding First Horizon National Corporation’s financial results.
This supplement compares current period results to earnings and other financial information from the previous four quarters.
Please feel free to call if you have any additional questions.
Regards,
Dave Miller, Investor Relations
901-523-4162
dwmiller@firsthorizon.com
CONSOLIDATED SUMMARY | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
Net interest income | $237,419 | $245,997 | $251,621 | $253,598 | $245,721 | |||||||||||
Noninterest income | 272,915 | 313,342 | 309,170 | 332,119 | 277,891 | |||||||||||
Security gain/(loss) | 10,273 | 3,002 | 8,757 | 2,893 | (80,281 | ) | ||||||||||
Total revenue | 520,607 | 562,341 | 569,548 | 588,610 | 443,331 | |||||||||||
Noninterest expense | 403,012 | 431,630 | 452,899 | 423,011 | 435,081 | |||||||||||
Provision | 28,486 | 22,983 | 23,694 | 18,653 | 17,799 | |||||||||||
Pretax income/(loss) | 89,109 | 107,728 | 92,955 | 146,946 | (9,549 | ) | ||||||||||
Provision/(benefit) for income taxes | 18,802 | 31,448 | 25,776 | 43,013 | (12,959 | ) | ||||||||||
Income from continuing operations | 70,307 | 76,280 | 67,179 | 103,933 | 3,410 | |||||||||||
Income/(loss) from discontinued operations, net of tax | 240 | 187 | (69 | ) | 376 | 210,273 | ||||||||||
Income before cumulative effect | 70,547 | 76,467 | 67,110 | 104,309 | 213,683 | |||||||||||
Cumulative effect of changes in accounting | ||||||||||||||||
principle, net of tax | - | - | - | - | 1,345 | |||||||||||
Net income | $70,547 | $ 76,467 | $67,110 | $104,309 | $215,028 | |||||||||||
Tax rate | 21.1 | % | 29.2 | % | 27.7 | % | 29.3 | % | NM | |||||||
Efficiency ratio | 77.4 | % | 76.8 | % | 79.5 | % | 71.9 | % | 98.1 | % | ||||||
NM - Not meaningful |
1
SELECTED FINANCIAL DATA | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Dollars in thousands, except per share data) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
Income from continuing operations | $70,307 | $76,280 | $67,179 | $103,933 | $3,410 | |||||||||||
Income/(loss) from discontinued operations, | ||||||||||||||||
net of tax | 240 | 187 | (69 | ) | 376 | 210,273 | ||||||||||
Cumulative effect of changes in accounting | ||||||||||||||||
principle, net of tax | - | - | - | - | 1,345 | |||||||||||
Net income | 70,547 | 76,467 | 67,110 | 104,309 | 215,028 | |||||||||||
Common Stock Data | ||||||||||||||||
Diluted earnings per common share: | ||||||||||||||||
Diluted EPS from continuing operations | $.55 | $.60 | $.53 | $.82 | $.03 | |||||||||||
Diluted EPS before cumulative effect of | ||||||||||||||||
changes in accounting principle | .55 | .60 | .53 | .82 | 1.66 | |||||||||||
Diluted EPS | .55 | .60 | .53 | .82 | 1.67 | |||||||||||
Diluted shares | 128,704 | 127,784 | 127,523 | 127,280 | 129,100 | |||||||||||
Period-end shares outstanding | 126,424 | 124,866 | 124,467 | 123,947 | 123,230 | |||||||||||
Dividends declared per share | $.45 | $.45 | $.45 | $.45 | $.45 | |||||||||||
Selected Average Balances | ||||||||||||||||
Total assets | $ | 38,647,044 | $ | 39,327,781 | $ | 39,519,765 | $ | 38,494,898 | $ | 37,689,523 | ||||||
Total loans, net of unearned income | 22,007,211 | 21,894,032 | 21,808,787 | 21,445,153 | 20,853,947 | |||||||||||
Investment securities | 3,817,015 | 3,952,007 | 3,805,160 | 3,008,310 | 3,026,429 | |||||||||||
Earning assets | 33,750,530 | 34,313,781 | 34,627,512 | 33,946,387 | 33,142,044 | |||||||||||
Deposits | 21,380,760 | 23,155,050 | 22,926,483 | 21,981,445 | 22,939,767 | |||||||||||
Total long-term debt | 6,388,955 | 5,718,968 | 5,538,323 | 5,160,610 | 3,805,307 | |||||||||||
Shareholders' equity | 2,463,903 | 2,510,752 | 2,442,030 | 2,401,428 | 2,335,512 | |||||||||||
Selected Period-End Balances | ||||||||||||||||
Total assets | $ | 38,828,766 | $ | 37,918,259 | $ | 40,076,183 | $ | 37,469,234 | $ | 37,300,975 | ||||||
Total loans, net of unearned income | 22,268,190 | 22,104,905 | 21,955,030 | 21,717,264 | 21,211,946 | |||||||||||
Investment securities | 3,276,312 | 3,890,420 | 3,983,049 | 3,108,569 | 2,944,826 | |||||||||||
Earning assets | 32,682,577 | 32,320,221 | 33,259,328 | 31,879,716 | 31,617,338 | |||||||||||
Deposits | 22,491,951 | 20,213,232 | 25,284,541 | 21,693,442 | 21,517,047 | |||||||||||
Total long-term debt | 6,528,015 | 5,836,360 | 5,487,188 | 5,606,294 | 4,599,339 | |||||||||||
Shareholders' equity | 2,514,676 | 2,462,390 | 2,510,524 | 2,442,193 | 2,399,608 | |||||||||||
Selected Ratios and Other | ||||||||||||||||
Return on average assets | .74 | % | .77 | % | .67 | % | 1.09 | % | 2.31 | % | ||||||
Return on average equity | 11.6 | 12.1 | 10.9 | 17.4 | 37.3 | |||||||||||
FTE employees | 12,018 | 12,131 | 12,324 | 12,413 | 13,053 |
2
STATEMENTS OF INCOME | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
Interest income | $583,185 | $604,562 | $612,598 | $578,582 | $533,369 | |||||||||||
Less interest expense | 345,766 | 358,565 | 360,977 | 324,984 | 287,648 | |||||||||||
Net interest income | 237,419 | 245,997 | 251,621 | 253,598 | 245,721 | |||||||||||
Provision for loan losses | 28,486 | 22,983 | 23,694 | 18,653 | 17,799 | |||||||||||
Net interest income after | ||||||||||||||||
provision for loan losses | 208,933 | 223,014 | 227,927 | 234,945 | 227,922 | |||||||||||
Noninterest income: | ||||||||||||||||
Capital markets | 87,113 | 92,809 | 95,215 | 102,165 | 92,858 | |||||||||||
Mortgage banking | 73,097 | 87,524 | 85,935 | 116,472 | 80,682 | |||||||||||
Deposit transactions | ||||||||||||||||
and cash management | 39,358 | 43,317 | 44,503 | 42,756 | 38,023 | |||||||||||
Revenue from loan sales and securitizations | 9,663 | 16,276 | 11,830 | 12,212 | 11,357 | |||||||||||
Insurance commissions | 9,789 | 8,951 | 10,534 | 12,461 | 14,686 | |||||||||||
Trust services and investment | ||||||||||||||||
management | 9,688 | 10,424 | 9,609 | 10,824 | 10,657 | |||||||||||
Securities gains/(losses), net | 10,273 | 3,002 | 8,757 | 2,893 | (80,281 | ) | ||||||||||
Other | 44,207 | 54,041 | 51,544 | 35,229 | 29,628 | |||||||||||
Total noninterest income | 283,188 | 316,344 | 317,927 | 335,012 | 197,610 | |||||||||||
Adjusted gross income after | ||||||||||||||||
provision for loan losses | 492,121 | 539,358 | 545,854 | 569,957 | 425,532 | |||||||||||
Noninterest expense: | ||||||||||||||||
Employee compensation, | ||||||||||||||||
incentives and benefits | 246,343 | 257,397 | 260,351 | 245,796 | 260,141 | |||||||||||
Occupancy | 28,784 | 29,298 | 29,745 | 27,525 | 30,102 | |||||||||||
Equipment rentals, depreciation | ||||||||||||||||
and maintenance | 17,613 | 17,867 | 17,893 | 17,858 | 20,264 | |||||||||||
Operations services | 17,821 | 17,550 | 17,976 | 17,075 | 17,440 | |||||||||||
Communications and courier | 11,540 | 11,978 | 12,950 | 13,409 | 14,912 | |||||||||||
Amortization of intangible assets | 2,825 | 2,460 | 3,233 | 2,881 | 2,888 | |||||||||||
Other | 78,086 | 95,080 | 110,751 | 98,467 | 89,334 | |||||||||||
Total noninterest expense | 403,012 | 431,630 | 452,899 | 423,011 | 435,081 | |||||||||||
Pretax income/(loss) | 89,109 | 107,728 | 92,955 | 146,946 | (9,549 | ) | ||||||||||
Provision/(benefit) for income taxes | 18,802 | 31,448 | 25,776 | 43,013 | (12,959 | ) | ||||||||||
Income from continuing operations | 70,307 | 76,280 | 67,179 | 103,933 | 3,410 | |||||||||||
Income/(loss) from discontinued operations, | ||||||||||||||||
net of tax | 240 | 187 | (69 | ) | 376 | 210,273 | ||||||||||
Income before cumulative effect | 70,547 | 76,467 | 67,110 | 104,309 | 213,683 | |||||||||||
Cumulative effect of changes in accounting | ||||||||||||||||
principle, net of tax | - | - | - | - | 1,345 | |||||||||||
Net income | $70,547 | $76,467 | $67,110 | $104,309 | $215,028 |
3
OTHER INCOME AND OTHER EXPENSE | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
All other income: | ||||||||||||||||
Brokerage management fees and | ||||||||||||||||
commissions | $9,631 | $9,434 | $8,545 | $10,243 | $8,960 | |||||||||||
Bankcard income | 6,005 | 6,386 | 6,441 | 6,362 | 6,916 | |||||||||||
Bank owned life insurance | 5,965 | 6,054 | 5,216 | 3,928 | 3,866 | |||||||||||
Remittance processing | 3,500 | 3,576 | 3,525 | 3,642 | 3,994 | |||||||||||
Deferred compensation | 1,265 | 8,188 | 6,948 | (5,939 | ) | 5,450 | ||||||||||
Other service charges | 3,681 | 3,556 | 3,622 | 3,764 | 3,619 | |||||||||||
Letter of credit | 1,620 | 1,712 | 1,659 | 1,885 | 2,015 | |||||||||||
ATM interchange fees | 1,917 | 1,801 | 1,809 | 1,799 | 1,682 | |||||||||||
Reinsurance fees | 1,784 | 2,075 | 1,595 | 1,571 | 1,551 | |||||||||||
Check clearing fees | 1,212 | 1,386 | 1,593 | 1,679 | 1,727 | |||||||||||
Electronic banking fees | 1,655 | 1,505 | 1,485 | 1,502 | 1,483 | |||||||||||
Federal flood certifications | 1,123 | 1,121 | 1,214 | 1,361 | 1,300 | |||||||||||
Other | 4,849 | 7,247 | 7,892 | 3,432 | (12,935 | ) | ||||||||||
Total | $44,207 | $54,041 | $51,544 | $35,229 | $29,628 | |||||||||||
All other expense: | ||||||||||||||||
Advertising and public relations | $10,262 | $11,162 | $13,272 | $10,998 | $11,995 | |||||||||||
Legal and professional fees | 11,591 | 12,046 | 11,071 | 11,600 | 8,295 | |||||||||||
Computer software | 9,186 | 8,608 | 8,959 | 8,827 | 7,987 | |||||||||||
Travel and entertainment | 5,814 | 8,518 | 8,164 | 8,652 | 6,972 | |||||||||||
Contract employment | 5,022 | 5,836 | 6,955 | 7,094 | 7,535 | |||||||||||
Distributions on preferred stock | ||||||||||||||||
of subsidiary | 4,658 | 4,769 | 4,874 | 4,453 | 4,050 | |||||||||||
Low income housing expense | 4,752 | 6,056 | 3,968 | 3,282 | 3,721 | |||||||||||
Supplies | 3,601 | 3,177 | 3,961 | 4,260 | 3,674 | |||||||||||
Loan closing costs | 3,024 | 2,297 | 3,835 | 3,729 | 2,234 | |||||||||||
Customer relations | 1,942 | 2,287 | 2,123 | 2,177 | 2,101 | |||||||||||
Other insurance and taxes | 2,403 | 2,265 | 2,269 | 2,209 | 1,872 | |||||||||||
Employee training and dues | 1,648 | 1,533 | 1,658 | 1,912 | 1,814 | |||||||||||
Loan insurance expense | 1,247 | 721 | 1,784 | 1,958 | 2,114 | |||||||||||
Fed services fees | 1,445 | 1,445 | 1,613 | 1,736 | 1,749 | |||||||||||
Complimentary check expense | 1,291 | 1,329 | 1,357 | 1,357 | 1,328 | |||||||||||
Foreclosed real estate | 2,292 | 1,675 | (86 | ) | 2,587 | 208 | ||||||||||
Bank examination costs | 1,130 | 1,102 | 1,103 | 1,081 | 1,081 | |||||||||||
Deposit insurance premium | 883 | 765 | 737 | 801 | 895 | |||||||||||
Other | 5,895 | 19,489 | 33,134 | 19,754 | 19,709 | |||||||||||
Total | $78,086 | $95,080 | $110,751 | $98,467 | $89,334 |
4
AVERAGE AND PERIOD-END LOANS | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
Average loans: | ||||||||||||||||
Loans, net of unearned income: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial, financial and industrial | $7,131,102 | $6,903,708 | $6,803,461 | $6,570,293 | $6,415,436 | |||||||||||
Real estate commercial | 1,157,711 | 1,187,431 | 1,221,408 | 1,259,416 | 1,225,049 | |||||||||||
Real estate construction | 2,843,263 | 2,741,118 | 2,575,590 | 2,380,430 | 2,197,693 | |||||||||||
Total commercial loans | 11,132,076 | 10,832,257 | 10,600,459 | 10,210,139 | 9,838,178 | |||||||||||
Retail: | ||||||||||||||||
Real estate residential | 7,908,039 | 8,211,506 | 8,512,589 | 8,560,085 | 8,644,920 | |||||||||||
Real estate construction | 2,045,952 | 2,081,885 | 2,065,849 | 2,028,480 | 1,961,658 | |||||||||||
Other retail | 153,651 | 160,366 | 160,446 | 162,573 | 164,567 | |||||||||||
Credit card receivables | 195,209 | 201,092 | 201,319 | 197,706 | 238,089 | |||||||||||
Real estate loans pledged against | ||||||||||||||||
other collateralized borrowings (a) | 572,284 | 406,926 | 268,125 | 286,170 | 6,535 | |||||||||||
Total retail loans | 10,875,135 | 11,061,775 | 11,208,328 | 11,235,014 | 11,015,769 | |||||||||||
Total loans, net of unearned income | $22,007,211 | $21,894,032 | $21,808,787 | $21,445,153 | $20,853,947 | |||||||||||
Period-end loans: | ||||||||||||||||
Loans, net of unearned income: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial, financial and industrial | $7,371,873 | $7,201,009 | $6,945,207 | $6,705,925 | $6,538,798 | |||||||||||
Real estate commercial | 1,144,086 | 1,136,590 | 1,199,084 | 1,276,278 | 1,232,021 | |||||||||||
Real estate construction | 2,931,183 | 2,753,458 | 2,660,415 | 2,453,579 | 2,277,825 | |||||||||||
Total commercial loans | 11,447,142 | 11,091,057 | 10,804,706 | 10,435,782 | 10,048,644 | |||||||||||
Retail: | ||||||||||||||||
Real estate residential | 7,856,197 | 7,973,313 | 8,428,652 | 8,562,733 | 8,511,300 | |||||||||||
Real estate construction | 2,073,293 | 2,085,133 | 2,096,440 | 2,076,004 | 2,001,916 | |||||||||||
Other retail | 151,959 | 161,178 | 163,134 | 163,121 | 161,617 | |||||||||||
Credit card receivables | 187,658 | 203,307 | 202,866 | 202,117 | 194,908 | |||||||||||
Real estate loans pledged against | ||||||||||||||||
other collateralized borrowings (a) | 551,941 | 590,917 | 259,232 | 277,507 | 293,561 | |||||||||||
Total retail loans | 10,821,048 | 11,013,848 | 11,150,324 | 11,281,482 | 11,163,302 | |||||||||||
Total loans, net of unearned income | $22,268,190 | $22,104,905 | $21,955,030 | $21,717,264 | $21,211,946 | |||||||||||
(a) During 2006, FHN sold loans through on-balance sheet securitizations, which were structured as financings for accounting purposes. |
5
PERIOD-END STATEMENTS OF CONDITION | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
Assets: | ||||||||||||||||
Cash and due from banks | $896,182 | $976,619 | $903,482 | $854,846 | $887,539 | |||||||||||
Federal funds sold and securities | ||||||||||||||||
purchased under agreements to resell | 1,757,365 | 1,202,537 | 1,992,426 | 1,572,143 | 1,347,577 | |||||||||||
Total cash and cash equivalents | 2,653,547 | 2,179,156 | 2,895,908 | 2,426,989 | 2,235,116 | |||||||||||
Investment in bank time deposits | 15,739 | 18,037 | 17,798 | 75,903 | 25,319 | |||||||||||
Trading securities | 2,443,342 | 2,230,745 | 2,512,744 | 2,183,102 | 2,508,615 | |||||||||||
Loans held for sale | 2,921,629 | 2,873,577 | 2,798,281 | 3,222,735 | 3,579,055 | |||||||||||
Investment Securities | 3,276,312 | 3,890,420 | 3,983,049 | 3,108,569 | 2,944,826 | |||||||||||
Loans, net of unearned income | 22,268,190 | 22,104,905 | 21,955,030 | 21,717,264 | 21,211,946 | |||||||||||
Less: Allowance for loan losses | 220,806 | 216,285 | 206,829 | 199,835 | 195,011 | |||||||||||
Total net loans | 22,047,384 | 21,888,620 | 21,748,201 | 21,517,429 | 21,016,935 | |||||||||||
Capital markets receivables | 1,144,135 | 732,282 | 1,027,927 | 1,058,690 | 858,072 | |||||||||||
Mortgage servicing rights, net | 1,540,041 | 1,533,942 | 1,498,341 | 1,595,413 | 1,475,448 | |||||||||||
Goodwill | 275,582 | 275,582 | 274,534 | 281,909 | 281,475 | |||||||||||
Other intangible assets, net | 61,672 | 64,530 | 70,546 | 75,056 | 76,666 | |||||||||||
Premises and equipment, net | 445,301 | 451,708 | 441,659 | 431,385 | 422,346 | |||||||||||
Real estate acquired by foreclosure | 68,613 | 63,519 | 65,224 | 60,577 | 48,959 | |||||||||||
Discontinued assets | 358 | 416 | 939,728 | 696 | 56,712 | |||||||||||
Other assets | 1,935,111 | 1,715,725 | 1,802,243 | 1,430,781 | 1,771,431 | |||||||||||
Total assets | $38,828,766 | $37,918,259 | $40,076,183 | $37,469,234 | $37,300,975 | |||||||||||
Liabilities and shareholders' equity: | ||||||||||||||||
Deposits: | ||||||||||||||||
Savings | $3,607,674 | $3,354,180 | $3,256,680 | $3,246,821 | $3,218,206 | |||||||||||
Interest-bearing demand deposits | 1,941,422 | 1,969,700 | 1,742,276 | 1,894,707 | 1,904,235 | |||||||||||
Time deposits | 2,876,257 | 2,924,050 | 2,906,424 | 2,819,597 | 2,692,046 | |||||||||||
Certificates of deposit $100,000 and more | 8,559,807 | 6,517,629 | 11,920,226 | 8,053,119 | 8,228,543 | |||||||||||
Total interest-bearing deposits | 16,985,160 | 14,765,559 | 19,825,606 | 16,014,244 | 16,043,030 | |||||||||||
Noninterest-bearing deposits | 5,506,791 | 5,447,673 | 5,458,935 | 5,679,198 | 5,474,017 | |||||||||||
Total deposits | 22,491,951 | 20,213,232 | 25,284,541 | 21,693,442 | 21,517,047 | |||||||||||
Federal funds purchased and securities | ||||||||||||||||
sold under agreements to repurchase | 3,173,476 | 4,961,799 | 2,416,974 | 3,387,711 | 4,337,243 | |||||||||||
Trading liabilities | 678,796 | 789,957 | 847,453 | 929,694 | 766,479 | |||||||||||
Commercial paper and other short-term borrowings | 819,768 | 1,258,513 | 926,292 | 721,227 | 749,979 | |||||||||||
Term borrowings | 5,968,789 | 5,243,961 | 5,226,772 | 5,325,014 | 4,299,539 | |||||||||||
Other collateralized borrowings | 559,226 | 592,399 | 260,416 | 281,280 | 299,800 | |||||||||||
Total long-term debt | 6,528,015 | 5,836,360 | 5,487,188 | 5,606,294 | 4,599,339 | |||||||||||
Capital markets payables | 1,088,340 | 799,489 | 989,332 | 1,057,617 | 941,911 | |||||||||||
Discontinued liabilities | 32,608 | 6,966 | 6,977 | 8,422 | 233,402 | |||||||||||
Other liabilities | 1,205,859 | 1,294,283 | 1,311,628 | 1,327,360 | 1,460,693 | |||||||||||
Total liabilities | 36,018,813 | 35,160,599 | 37,270,385 | 34,731,767 | 34,606,093 | |||||||||||
Preferred stock of subsidiary | 295,277 | 295,270 | 295,274 | 295,274 | 295,274 | |||||||||||
Shareholders' equity: | ||||||||||||||||
Common stock | 78,593 | 78,041 | 77,792 | 77,467 | 77,019 | |||||||||||
Capital surplus | 341,491 | 312,521 | 301,857 | 282,563 | 269,564 | |||||||||||
Undivided profits | 2,155,007 | 2,144,276 | 2,124,312 | 2,113,514 | 2,065,285 | |||||||||||
Accumulated other comprehensive (loss)/income, net | (60,415 | ) | (72,448 | ) | 6,563 | (31,351 | ) | (12,260 | ) | |||||||
Total shareholders' equity | 2,514,676 | 2,462,390 | 2,510,524 | 2,442,193 | 2,399,608 | |||||||||||
Total liabilities and shareholders' equity | $38,828,766 | $37,918,259 | $40,076,183 | $37,469,234 | $37,300,975 |
6
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES | ||||||||||
Quarterly, Unaudited | ||||||||||
Average Balance | Interest Revenue/ Expense | Percent Average Rate/Yield | ||||||||
(Fully taxable equivalent) | ||||||||||
(Dollars in thousands) | 1Q07 | 1Q07 | 1Q07 | |||||||
Assets: | ||||||||||
Earning assets: | ||||||||||
Loans, net of unearned income* | $22,007,211 | $410,512 | 7.56 | % | ||||||
Loans held for sale | 3,646,252 | 58,845 | 6.46 | |||||||
Investment securities: | ||||||||||
U.S. Treasuries | 50,899 | 636 | 5.06 | |||||||
U.S. government agencies | 3,513,737 | 50,221 | 5.72 | |||||||
States and municipalities | 1,769 | 4 | .97 | |||||||
Other | 250,610 | 3,107 | 4.96 | |||||||
Total investment securities | 3,817,015 | 53,968 | 5.66 | |||||||
Capital markets securities inventory | 2,409,211 | 30,297 | 5.03 | |||||||
Mortgage banking trading securities | 331,800 | 10,317 | 12.44 | |||||||
Other earning assets: | ||||||||||
Federal funds sold and securities | ||||||||||
purchased under agreements to resell | 1,519,375 | 19,228 | 5.13 | |||||||
Investment in bank time deposits | 19,666 | 260 | 5.35 | |||||||
Total other earning assets | 1,539,041 | 19,488 | 5.14 | |||||||
Total earning assets/Interest income | 33,750,530 | $583,427 | 6.98 | % | ||||||
Allowance for loan losses | (223,932 | ) | ||||||||
Cash and due from banks | 880,002 | |||||||||
Capital markets receivables | 137,536 | |||||||||
Premises and equipment, net | 449,283 | |||||||||
Other assets | 3,653,625 | |||||||||
Total assets | $38,647,044 | |||||||||
Liabilities and shareholders' equity: | ||||||||||
Interest-bearing liabilities: | ||||||||||
Interest-bearing deposits: | ||||||||||
Interest-bearing demand deposits | $1,927,573 | $6,889 | 1.45 | % | ||||||
Savings | 3,413,592 | 26,031 | 3.09 | |||||||
Time deposits | 2,893,963 | 33,037 | 4.63 | |||||||
Total interest-bearing core deposits | 8,235,128 | 65,957 | 3.25 | |||||||
Certificates of deposit $100,000 and more | 8,040,937 | 106,276 | 5.36 | |||||||
Federal funds purchased and securities | ||||||||||
sold under agreements to repurchase | 4,505,777 | 54,379 | 4.89 | |||||||
Capital markets trading liabilities | 1,166,790 | 16,361 | 5.69 | |||||||
Commercial paper and other short-term | ||||||||||
borrowings | 987,898 | 12,785 | 5.25 | |||||||
Total long-term debt | 6,388,955 | 90,008 | 5.64 | |||||||
Total interest-bearing liabilities/Interest | ||||||||||
expense | 29,325,485 | $345,766 | 4.77 | % | ||||||
Noninterest-bearing deposits | 5,104,695 | |||||||||
Capital markets payables | 222,607 | |||||||||
Other liabilities | 1,235,077 | |||||||||
Preferred stock of subsidiary | 295,277 | |||||||||
Shareholders' equity | 2,463,903 | |||||||||
Total liabilities and shareholders' equity | $38,647,044 | |||||||||
Net interest income-tax equivalent basis | $237,661 | |||||||||
Fully taxable equivalent adjustment | (242 | ) | ||||||||
Net interest income | $237,419 | |||||||||
Net interest spread | 2.21 | % | ||||||||
Effect of interest-free sources used to fund | ||||||||||
earning assets | .63 | |||||||||
Net interest margin | 2.84 | % |
* Includes loans on nonaccrual status.
Yields and corresponding income amounts are adjusted to a fully taxable equivalent. Earning assets yields are expressed net of unearned income.
Rates are expressed net of unamortized debenture cost for long-term debt. Net interest margin is computed using total net interest income.
7
CONSOLIDATED AVERAGE BALANCE SHEETS AND RELATED YIELDS AND RATES Quarterly, Unaudited | |||||||||||||||||||||||||||||||||||||
Interest | Percent | ||||||||||||||||||||||||||||||||||||
Average | Revenue/ | Average | |||||||||||||||||||||||||||||||||||
Balance | Expense | Rate/Yield | |||||||||||||||||||||||||||||||||||
(Fully taxable equivalent) | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 4Q06 | 3Q06 | 2Q06 | 1Q06 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||
Earning assets: | |||||||||||||||||||||||||||||||||||||
Loans, net of unearned income* | $21,894,032 | $21,808,787 | $21,445,153 | $20,853,947 | $417,261 | $416,980 | $393,546 | $363,577 | 7.56 | % | 7.59 | % | 7.36 | % | 7.07 | % | |||||||||||||||||||||
Loans held for sale | 3,796,828 | 4,192,558 | 4,608,310 | 4,760,823 | 63,852 | 72,135 | 75,832 | 76,342 | 6.73 | 6.88 | 6.58 | 6.41 | |||||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||||||||||||||||
U.S. Treasuries | 50,891 | 50,989 | 53,561 | 72,265 | 646 | 632 | 624 | 781 | 5.04 | 4.92 | 4.67 | 4.38 | |||||||||||||||||||||||||
U.S. government agencies | 3,652,056 | 3,512,162 | 2,731,213 | 2,736,495 | 52,107 | 50,262 | 38,211 | 32,676 | 5.71 | 5.72 | 5.60 | 4.78 | |||||||||||||||||||||||||
States and municipalities | 1,771 | 1,869 | 1,893 | 1,916 | 4 | 6 | 7 | 7 | .98 | 1.28 | 1.39 | 1.37 | |||||||||||||||||||||||||
Other | 247,289 | 240,140 | 221,643 | 215,753 | 3,141 | 3,017 | 2,726 | 2,548 | 5.08 | 5.02 | 4.92 | 4.72 | |||||||||||||||||||||||||
Total investment securities | 3,952,007 | 3,805,160 | 3,008,310 | 3,026,429 | 55,898 | 53,917 | 41,568 | 36,012 | 5.66 | 5.67 | 5.53 | 4.76 | |||||||||||||||||||||||||
Capital markets securities inventory | 2,514,046 | 2,524,102 | 2,356,754 | 2,176,124 | 34,251 | 34,128 | 31,849 | 27,327 | 5.45 | 5.41 | 5.41 | 5.02 | |||||||||||||||||||||||||
Mortgage banking trading securities | 327,842 | 380,586 | 462,592 | 442,453 | 9,895 | 10,762 | 11,798 | 11,246 | 12.07 | 11.31 | 10.20 | 10.17 | |||||||||||||||||||||||||
Other earning assets: | |||||||||||||||||||||||||||||||||||||
Federal funds sold and securities | |||||||||||||||||||||||||||||||||||||
purchased under agreements to resell | 1,810,935 | 1,875,420 | 2,018,408 | 1,866,146 | 23,466 | 24,412 | 23,712 | 18,995 | 5.14 | 5.16 | 4.71 | 4.13 | |||||||||||||||||||||||||
Investment in bank time deposits | 18,091 | 40,899 | 46,860 | 16,122 | 230 | 544 | 580 | 179 | 5.04 | 5.27 | 4.96 | 4.51 | |||||||||||||||||||||||||
Total other earning assets | 1,829,026 | 1,916,319 | 2,065,268 | 1,882,268 | 23,696 | 24,956 | 24,292 | 19,174 | 5.14 | 5.17 | 4.72 | 4.13 | |||||||||||||||||||||||||
Total earning assets/Interest income | 34,313,781 | 34,627,512 | 33,946,387 | 33,142,044 | $604,853 | $612,878 | $578,885 | $533,678 | 7.01 | % | 7.04 | % | 6.83 | % | 6.50 | % | |||||||||||||||||||||
Allowance for loan losses | (213,569 | ) | (206,871 | ) | (202,003 | ) | (196,316 | ) | |||||||||||||||||||||||||||||
Cash and due from banks | 828,291 | 816,342 | 794,019 | 831,172 | |||||||||||||||||||||||||||||||||
Capital markets receivables | 154,908 | 151,037 | 187,435 | 199,635 | |||||||||||||||||||||||||||||||||
Premises and equipment, net | 446,556 | 436,027 | 427,213 | 418,882 | |||||||||||||||||||||||||||||||||
Other assets | 3,797,814 | 3,695,718 | 3,341,847 | 3,294,106 | |||||||||||||||||||||||||||||||||
Total assets | $39,327,781 | $39,519,765 | $38,494,898 | $37,689,523 | |||||||||||||||||||||||||||||||||
Liabilities and shareholders' equity: | |||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||||||||||||||||
Interest-bearing demand deposits | $1,792,484 | $1,822,558 | $1,886,392 | $1,892,382 | $6,006 | $6,561 | $6,362 | $5,550 | 1.33 | % | 1.43 | % | 1.35 | % | 1.19 | % | |||||||||||||||||||||
Savings | 3,327,576 | 3,270,211 | 3,259,930 | 2,902,257 | 26,253 | 25,084 | 21,826 | 15,347 | 3.13 | 3.04 | 2.69 | 2.14 | |||||||||||||||||||||||||
Time deposits | 2,921,197 | 2,873,451 | 2,779,821 | 2,602,581 | 33,732 | 32,090 | 29,116 | 25,338 | 4.58 | 4.43 | 4.20 | 3.95 | |||||||||||||||||||||||||
Total interest-bearing core deposits | 8,041,257 | 7,966,220 | 7,926,143 | 7,397,220 | 65,991 | 63,735 | 57,304 | 46,235 | 3.26 | 3.17 | 2.90 | 2.53 | |||||||||||||||||||||||||
Certificates of deposit $100,000 and more | 9,820,358 | 9,694,677 | 8,859,178 | 10,626,088 | 132,938 | 130,875 | 110,068 | 119,296 | 5.37 | 5.36 | 4.98 | 4.55 | |||||||||||||||||||||||||
Federal funds purchased and securities | |||||||||||||||||||||||||||||||||||||
sold under agreements to repurchase | 3,888,492 | 4,650,930 | 4,975,223 | 4,745,621 | 46,321 | 56,639 | 58,084 | 47,821 | 4.73 | 4.83 | 4.68 | 4.09 | |||||||||||||||||||||||||
Capital markets trading liabilities | 1,322,664 | 1,358,976 | 1,368,933 | 1,304,492 | 18,560 | 19,233 | 19,923 | 18,347 | 5.57 | 5.61 | 5.84 | 5.70 | |||||||||||||||||||||||||
Commercial paper and other short-term | |||||||||||||||||||||||||||||||||||||
borrowings | 889,802 | 773,038 | 750,789 | 765,178 | 12,099 | 10,232 | 9,296 | 8,423 | 5.39 | 5.25 | 4.97 | 4.46 | |||||||||||||||||||||||||
Total long-term debt | 5,718,968 | 5,538,323 | 5,160,610 | 3,805,307 | 82,655 | 80,263 | 70,309 | 47,526 | 5.79 | 5.80 | 5.46 | 5.00 | |||||||||||||||||||||||||
Total interest-bearing liabilities/Interest | |||||||||||||||||||||||||||||||||||||
expense | 29,681,541 | 29,982,164 | 29,040,876 | 28,643,906 | $358,564 | $360,977 | $324,984 | $287,648 | 4.80 | % | 4.79 | % | 4.49 | % | 4.06 | % | |||||||||||||||||||||
Noninterest-bearing deposits | 5,293,435 | 5,265,586 | 5,196,124 | 4,916,459 | |||||||||||||||||||||||||||||||||
Capital markets payables | 247,738 | 213,104 | 236,481 | 229,867 | |||||||||||||||||||||||||||||||||
Other liabilities | 1,299,041 | 1,321,607 | 1,324,715 | 1,268,505 | |||||||||||||||||||||||||||||||||
Preferred stock of subsidiary | 295,274 | 295,274 | 295,274 | 295,274 | |||||||||||||||||||||||||||||||||
Shareholders' equity | 2,510,752 | 2,442,030 | 2,401,428 | 2,335,512 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders' equity | $39,327,781 | $39,519,765 | $38,494,898 | $37,689,523 | |||||||||||||||||||||||||||||||||
Net interest income-tax equivalent basis | $246,289 | $251,901 | $253,901 | $246,030 | |||||||||||||||||||||||||||||||||
Fully taxable equivalent adjustment | (291 | ) | (279 | ) | (303 | ) | (309 | ) | |||||||||||||||||||||||||||||
Net interest income | $245,998 | $251,622 | $253,598 | $245,721 | |||||||||||||||||||||||||||||||||
Net interest spread | 2.21 | % | 2.25 | % | 2.34 | % | 2.44 | % | |||||||||||||||||||||||||||||
Effect of interest-free sources used to fund | |||||||||||||||||||||||||||||||||||||
earning assets | .65 | .65 | .66 | .55 | |||||||||||||||||||||||||||||||||
Net interest margin | 2.86 | % | 2.90 | % | 3.00 | % | 2.99 | % | |||||||||||||||||||||||||||||
* Includes loans on nonaccrual status. | |||||||||||||||||||||||||||||||||||||
Yields and corresponding income amounts are adjusted to a fully taxable equivalent. Earning assets yields are expressed net of unearned income. | |||||||||||||||||||||||||||||||||||||
Rates are expressed net of unamortized debenture cost for long-term debt. Net interest margin is computed using total net interest income. |
8
MORTGAGE SERVICING RIGHTS | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
FIRST LIENS | ||||||||||||||||
Fair value beginning balance | $1,495,215 | $1,464,360 | $1,565,649 | $1,449,472 | $1,318,219 | |||||||||||
Addition of mortgage servicing rights | 84,707 | 86,306 | 90,970 | 117,197 | 95,624 | |||||||||||
Reductions due to loan payments | (61,698 | ) | (66,937 | ) | (60,328 | ) | (72,270 | ) | (58,641 | ) | ||||||
Changes in fair value due to: | ||||||||||||||||
Changes in current market interest rates | (17,833 | ) | 11,601 | (131,646 | ) | 70,933 | 94,249 | |||||||||
Other changes in fair value | (54 | ) | (115 | ) | (285 | ) | 317 | 21 | ||||||||
Fair value ending balance | $1,500,337 | $1,495,215 | $1,464,360 | $1,565,649 | $1,449,472 | |||||||||||
SECOND LIENS | ||||||||||||||||
Fair value beginning balance | $24,091 | $18,851 | $14,457 | $11,062 | $5,470 | |||||||||||
Addition of mortgage servicing rights | 3,998 | 3,931 | 4,905 | 4,267 | 6,360 | |||||||||||
Reductions due to loan payments | (2,378 | ) | (1,716 | ) | (1,172 | ) | (955 | ) | (797 | ) | ||||||
Changes in fair value due to: | ||||||||||||||||
Changes in current market interest rates | (1 | ) | 11 | (61 | ) | 46 | 49 | |||||||||
Changes in assumptions | - | 2,400 | 722 | - | - | |||||||||||
Other changes in fair value | - | 614 | - | 37 | (20 | ) | ||||||||||
Fair value ending balance | $25,710 | $24,091 | $18,851 | $14,457 | $11,062 | |||||||||||
HELOC | ||||||||||||||||
Fair value beginning balance | $14,636 | $15,130 | $15,307 | $14,914 | $14,384 | |||||||||||
Addition of mortgage servicing rights | 1,041 | 1,028 | 1,559 | 1,891 | 1,971 | |||||||||||
Reductions due to loan payments | (1,683 | ) | (1,385 | ) | (1,805 | ) | (2,021 | ) | (2,317 | ) | ||||||
Changes in fair value due to: | ||||||||||||||||
Changes in current market interest rates | - | (1 | ) | 61 | 523 | 506 | ||||||||||
Changes in assumptions | - | - | 8 | - | - | |||||||||||
Other changes in fair value | - | (136 | ) | - | - | 370 | ||||||||||
Fair value ending balance | $13,994 | $14,636 | $15,130 | $15,307 | $14,914 | |||||||||||
TOTAL CONSOLIDATED | ||||||||||||||||
Fair value beginning balance | $1,533,942 | $1,498,341 | $1,595,413 | $1,475,448 | $1,338,073 | |||||||||||
Addition of mortgage servicing rights | 89,746 | 91,265 | 97,434 | 123,355 | 103,955 | |||||||||||
Reductions due to loan payments | (65,759 | ) | (70,038 | ) | (63,305 | ) | (75,246 | ) | (61,755 | ) | ||||||
Changes in fair value due to: | ||||||||||||||||
Changes in current market interest rates | (17,834 | ) | 11,611 | (131,646 | ) | 71,502 | 94,804 | |||||||||
Changes in assumptions | - | 2,400 | 730 | - | - | |||||||||||
Other changes in fair value | (54 | ) | 363 | (285 | ) | 354 | 371 | |||||||||
Fair value ending balance | $1,540,041 | $1,533,942 | $1,498,341 | $1,595,413 | $1,475,448 |
9
RETAIL/COMMERCIAL BANKING | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
Net interest income | $224,116 | $228,955 | $232,830 | $232,496 | $225,740 | |||||||||||
Noninterest income | 102,959 | 114,339 | 111,594 | 113,984 | 107,739 | |||||||||||
Divestitures | - | - | - | - | - | |||||||||||
Security G/L | - | - | - | - | - | |||||||||||
Total revenue | 327,075 | 343,294 | 344,424 | 346,480 | 333,479 | |||||||||||
Total noninterest expense | 198,195 | 211,509 | 205,416 | 214,744 | 218,366 | |||||||||||
Provision | 28,493 | 23,263 | 23,549 | 18,361 | 18,026 | |||||||||||
Pretax income | $100,387 | $108,522 | $115,459 | $113,375 | $97,087 | |||||||||||
Efficiency ratio | 61 | % | 62 | % | 60 | % | 62 | % | 65 | % | ||||||
Balance Sheet | ||||||||||||||||
Average loans (millions) | $21,592 | $21,471 | $21,382 | $21,098 | $20,598 | |||||||||||
Other earning assets (millions) | 557 | 413 | 465 | 547 | 843 | |||||||||||
Total earning assets (millions) | $22,149 | $21,884 | $21,847 | $21,645 | $21,441 | |||||||||||
Total deposits | $12,143 | $12,085 | $11,980 | $11,760 | $11,516 | |||||||||||
Net interest margin | 4.10 | % | 4.15 | % | 4.23 | % | 4.31 | % | 4.27 | % | ||||||
Noninterest income | ||||||||||||||||
Deposit transactions & cash mgmt | $39,344 | $43,299 | $44,483 | $42,740 | $38,012 | |||||||||||
Insurance commissions | 9,586 | 8,912 | 10,404 | 12,731 | 14,480 | |||||||||||
Trust services & investment mgmt | 9,733 | 10,469 | 9,642 | 10,858 | 10,700 | |||||||||||
Bankcard Income | 5,701 | 6,079 | 6,164 | 6,097 | 6,655 | |||||||||||
Other service charges | 5,460 | 5,014 | 4,638 | 5,343 | 5,364 | |||||||||||
Check clearing fees | 1,212 | 1,386 | 1,594 | 1,679 | 1,727 | |||||||||||
Revenue from loan sales and | ||||||||||||||||
securitizations (a) | 8,522 | 13,886 | 10,068 | 10,548 | 8,238 | |||||||||||
Miscellaneous revenue | 23,401 | 25,294 | 24,601 | 23,988 | 22,563 | |||||||||||
Total noninterest income | $102,959 | $114,339 | $111,594 | $113,984 | $107,739 | |||||||||||
Key Statistics | ||||||||||||||||
Locations | ||||||||||||||||
Full-Service Financial Centers | ||||||||||||||||
First Tennesee | 199 | 197 | 194 | 192 | 192 | |||||||||||
First Horizon Bank | 32 | 32 | 27 | 23 | 21 | |||||||||||
Other | ||||||||||||||||
Trust total assets (millions)(b) | $12,878 | $12,472 | $12,866 | $11,541 | $11,838 | |||||||||||
Trust total managed assets (millions)(b) | 6,700 | 6,546 | 6,270 | 6,223 | 6,379 |
(a) Includes gains from whole-loan sales and net revenue from asset securitizations
(b) Current quarter is an estimate
(b) Current quarter is an estimate
Certain previously reported amounts have been reclassified to agree with current presentation.
10
MORTGAGE BANKING | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
Net interest income | $17,343 | $20,857 | $21,266 | $25,494 | $25,838 | |||||||||||
Noninterest income: | ||||||||||||||||
Net origination fees | 63,641 | 69,230 | 64,248 | 110,416 | 64,205 | |||||||||||
Net servicing fees | 3,008 | 11,826 | 15,701 | (727 | ) | 10,717 | ||||||||||
Other fees | 10,085 | 10,506 | 10,427 | 9,919 | 8,805 | |||||||||||
Total noninterest income | 76,734 | 91,562 | 90,376 | 119,608 | 83,727 | |||||||||||
Total revenue | 94,077 | 112,419 | 111,642 | 145,102 | 109,565 | |||||||||||
Noninterest expense | 105,331 | 108,925 | 136,804 | 115,155 | 114,756 | |||||||||||
Provision | (7 | ) | (280 | ) | 145 | 292 | (227 | ) | ||||||||
Pretax (loss)/income | $(11,247 | ) | $3,774 | $(25,307 | ) | $29,655 | $(4,964 | ) | ||||||||
Noninterest expense detail | ||||||||||||||||
Commissions & incentives | $44,984 | $47,428 | $50,090 | $54,831 | $53,385 | |||||||||||
FAS 91 cost deferral | (1,816 | ) | (1,131 | ) | 1,515 | 4,473 | (1,743 | ) | ||||||||
Other salaries & benefits | 51,882 | 56,462 | 56,584 | 50,420 | 63,708 | |||||||||||
Total salaries & benefits | 95,050 | 102,759 | 108,189 | 109,724 | 115,350 | |||||||||||
Contract labor & outsourcing | 2,574 | 3,103 | 4,025 | 4,170 | 4,771 | |||||||||||
Equipment & occupancy | 17,221 | 17,362 | 17,095 | 16,074 | 17,953 | |||||||||||
Foreclosure provision | 1,611 | 1,042 | (698 | ) | 2,379 | (1,082 | ) | |||||||||
Other expenses | 40,714 | 38,525 | 64,289 | 49,099 | 41,990 | |||||||||||
Total expenses before FAS 91 reclass | 157,170 | 162,791 | 192,900 | 181,446 | 178,982 | |||||||||||
FAS 91 reclassification * | (56,343 | ) | (57,575 | ) | (59,480 | ) | (69,334 | ) | (67,178 | ) | ||||||
Total noninterest expense before | ||||||||||||||||
segment allocations | 100,827 | 105,216 | 133,420 | 112,112 | 111,804 | |||||||||||
Segment allocations | 4,504 | 3,709 | 3,384 | 3,043 | 2,952 | |||||||||||
Total noninterest expense | $105,331 | $108,925 | $136,804 | $115,155 | $114,756 | |||||||||||
Other information | ||||||||||||||||
Efficiency ratio | 112 | % | 97 | % | 123 | % | 79 | % | 105 | % | ||||||
Warehouse (millions) | $3,030 | $3,124 | $3,173 | $3,598 | $3,524 | |||||||||||
Other earning assets (millions) | 762 | 793 | 836 | 865 | 739 | |||||||||||
Total earning assets (millions) | $3,792 | $3,917 | $4,009 | $4,463 | $4,263 | |||||||||||
Escrow balances | $1,858 | $2,000 | $1,965 | $1,903 | $1,641 | |||||||||||
Net interest margin | 1.85 | % | 2.11 | % | 2.10 | % | 2.29 | % | 2.46 | % | ||||||
Warehouse Spread | 1.12 | % | 1.24 | % | 1.18 | % | 1.44 | % | 1.77 | % | ||||||
Certain previously reported amounts have been reclassified to agree with current presentation. *See Note 1 - Financial Glossary |
11
MORTGAGE BANKING | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
ORIGINATION INCOME | ||||||||||||||||
Origination Fees | $58,755 | $63,255 | $65,132 | $77,174 | $67,043 | |||||||||||
FAS 91 Fee Deferral | (1,016 | ) | (225 | ) | 1,318 | 1,523 | (126 | ) | ||||||||
Appraisal, Final Inspection, | ||||||||||||||||
Credit Report Fees | 6,544 | 6,840 | 7,119 | 7,901 | 6,778 | |||||||||||
Total origination fees | 64,283 | 69,870 | 73,569 | 86,598 | 73,695 | |||||||||||
Secondary Marketing Income: | ||||||||||||||||
Prime: | ||||||||||||||||
OMSR, SRP | 76,821 | 68,373 | 72,323 | 90,933 | 74,603 | |||||||||||
Marketing G/L (Trading Gains) | 17,728 | 25,897 | 13,915 | 37,906 | 22,281 | |||||||||||
Concessions | (34,350 | ) | (33,293 | ) | (34,233 | ) | (41,355 | ) | (34,020 | ) | ||||||
LOCOM | (2,519 | ) | (1,629 | ) | (288 | ) | (398 | ) | 665 | |||||||
Subtotal Prime | 57,680 | 59,348 | 51,717 | 87,086 | 63,529 | |||||||||||
Non-Prime: | ||||||||||||||||
OMSR, SRP | 331 | 2,264 | 3,839 | 1,226 | 3,633 | |||||||||||
LOCOM | (553 | ) | (2,164 | ) | (1,940 | ) | 1,817 | (1,340 | ) | |||||||
Recourse Provision* | (1,757 | ) | (2,513 | ) | (3,457 | ) | 3,023 | (8,134 | ) | |||||||
Subtotal Non-Prime | (1,979 | ) | (2,413 | ) | (1,558 | ) | 6,066 | (5,841 | ) | |||||||
Total Secondary Marketing Fees - | ||||||||||||||||
Mortgage | 55,701 | 56,935 | 50,159 | 93,152 | 57,688 | |||||||||||
FAS 91 Reclassification | (56,343 | ) | (57,575 | ) | (59,480 | ) | (69,334 | ) | (67,178 | ) | ||||||
Total Origination Income | $63,641 | $69,230 | $64,248 | $110,416 | $64,205 | |||||||||||
Margins: | ||||||||||||||||
Marketing Margin on Deliveries (bps): | ||||||||||||||||
Prime: | ||||||||||||||||
OMSR, SRP | 130 | 113 | 116 | 129 | 117 | |||||||||||
Marketing G/L (Trading Gains) | 30 | 43 | 22 | 54 | 35 | |||||||||||
Concessions | (58 | ) | (55 | ) | (55 | ) | (59 | ) | (53 | ) | ||||||
LOCOM | (4 | ) | (3 | ) | - | (1 | ) | 1 | ||||||||
Total Prime | 98 | 98 | 83 | 123 | 100 | |||||||||||
Non-Prime: | ||||||||||||||||
OMSR, SRP | 25 | 118 | 164 | 37 | 83 | |||||||||||
LOCOM | (41 | ) | (113 | ) | (83 | ) | 56 | (31 | ) | |||||||
Recourse Provision* | (131 | ) | (131 | ) | (148 | ) | 93 | (186 | ) | |||||||
Total Non-Prime | (147 | ) | (126 | ) | (67 | ) | 186 | (134 | ) | |||||||
Total Marketing Margin on Deliveries | 92 | 91 | 77 | 126 | 85 | |||||||||||
*Represents the reclassification from expense to secondary marketing income of expected loss provisions related to the recourse obligation on sales of non-prime loans. |
12
MORTGAGE BANKING | ||||||||||||||||
Quarterly, Unaudited | ||||||||||||||||
($ in millions) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
KEY ORIGINATION METRICS | ||||||||||||||||
Production: | ||||||||||||||||
First Lien Production | $6,302 | $6,417 | $6,351 | $7,482 | $6,865 | |||||||||||
Breakdown by Product Type: | ||||||||||||||||
Prime: | ||||||||||||||||
Conventional Fixed | 53 | % | 49 | % | 45 | % | 43 | % | 38 | % | ||||||
Conventional ARM | 3 | % | 4 | % | 6 | % | 8 | % | 9 | % | ||||||
Jumbo Fixed | 9 | % | 8 | % | 7 | % | 6 | % | 6 | % | ||||||
Jumbo ARM | 6 | % | 7 | % | 7 | % | 7 | % | 6 | % | ||||||
Alt A | 20 | % | 22 | % | 25 | % | 27 | % | 32 | % | ||||||
Government | 7 | % | 7 | % | 5 | % | 6 | % | 5 | % | ||||||
Non Prime | 2 | % | 2 | % | 4 | % | 2 | % | 4 | % | ||||||
Other | - | 1 | % | 1 | % | 1 | % | - | ||||||||
Breakdown by Payment Type: | ||||||||||||||||
Fully amortizing | 70 | % | 70 | % | 70 | % | 69 | % | 66 | % | ||||||
Interest Only - Fixed | 20 | % | 14 | % | 10 | % | 10 | % | 11 | % | ||||||
Interest Only - ARM | 10 | % | 15 | % | 18 | % | 17 | % | 19 | % | ||||||
Option ARM's | - | 1 | % | 2 | % | 4 | % | 4 | % | |||||||
Production Refinanced % | 45 | % | 44 | % | 33 | % | 33 | % | 41 | % | ||||||
Production Purchased % | 55 | % | 56 | % | 67 | % | 67 | % | 59 | % | ||||||
ARMs % (Excluding Gov't ARMS) | 14 | % | 21 | % | 27 | % | 28 | % | 33 | % | ||||||
Total Sales Force | 2,486 | 2,440 | 2,495 | 2,467 | 2,609 | |||||||||||
Warehouse/Pipeline Balance: | ||||||||||||||||
Ending Warehouse Balance | $2,527 | $2,347 | $2,286 | $2,587 | $2,788 | |||||||||||
Ending Pipeline Balance (Locked) | 4,019 | 3,074 | 3,384 | 3,645 | 3,691 | |||||||||||
Loan Sales (Deliveries): | ||||||||||||||||
Prime | 5,919 | 6,062 | 6,257 | 7,066 | 6,371 | |||||||||||
Non-Prime | 134 | 192 | 233 | 325 | 436 | |||||||||||
Total Loan Sales | 6,053 | 6,254 | 6,490 | 7,391 | 6,807 |
Definitions: | ||
Prime: | Mortgages made to borrowers who typically have good credit history, full documentation, and standard structures; | |
"A" market conventional loans have limited credit and other risks. 1Q07 weighted average FICO score was 732. | ||
Alt-A: | Resembles prime mortgages but lack full documentation or have non-standard structures. | |
They have more potential risks than prime, but less than non-prime mortgages. 1Q07 weighted average FICO score was 717. | ||
Non-Prime: | Mortgage loans made to borrowers who typically have derogatory information in their credit history; | |
non-prime loans are also made to borrowers w/ acceptable credit history but have other non-standard loan features. 1Q07 weighted average FICO score was 624. | ||
Government: | FHA/VA loans that are eligible for GNMA securitizations and government guarantees. 1Q07 weighted average FICO score was 669. |
13
MORTGAGE BANKING | |||||||||||||||||||||||||||||||
Quarterly, Unaudited | |||||||||||||||||||||||||||||||
1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||||||||||||||||||
(Thousands) | $ | bps | $ | bps | $ | bps | $ | bps | $ | bps | |||||||||||||||||||||
SERVICING INCOME | |||||||||||||||||||||||||||||||
Gross Service Fees | $100,077 | 39 | $99,852 | 39 | $98,594 | 40 | $95,043 | 39 | $93,454 | 39 | |||||||||||||||||||||
Guarantee Fees | (18,570 | ) | (7 | ) | (18,630 | ) | (7 | ) | (15,778 | ) | (7 | ) | (17,348 | ) | (7 | ) | (18,876 | ) | (8 | ) | |||||||||||
Sub-Service Fee Income | 27 | - | 7 | - | 29 | - | 71 | - | 64 | - | |||||||||||||||||||||
Lender Paid MI | (2 | ) | - | (13 | ) | - | (24 | ) | - | (20 | ) | - | 108 | - | |||||||||||||||||
Net Service Fees | 81,532 | 32 | 81,216 | 32 | 82,821 | 33 | 77,746 | 32 | 74,750 | 31 | |||||||||||||||||||||
Early Payoff Interest Expense | (4,749 | ) | (2 | ) | (4,791 | ) | (2 | ) | (3,718 | ) | (2 | ) | (4,324 | ) | (2 | ) | (3,838 | ) | (2 | ) | |||||||||||
Ancillary Fees | 7,951 | 3 | 7,521 | 3 | 7,112 | 3 | 6,820 | 3 | 6,934 | 3 | |||||||||||||||||||||
Total Service Fees | 84,734 | 33 | 83,946 | 33 | 86,215 | 34 | 80,242 | 33 | 77,846 | 32 | |||||||||||||||||||||
Change in MSR Value - Runoff | (61,698 | ) | (66,937 | ) | (60,326 | ) | (72,270 | ) | (58,836 | ) | |||||||||||||||||||||
Net Hedging Results | |||||||||||||||||||||||||||||||
(Excluding Changes in MSR Value due to Runoff) | |||||||||||||||||||||||||||||||
Change in MSR Value - Other than Runoff | (17,138 | ) | 10,351 | (133,067 | ) | 69,564 | 95,961 | ||||||||||||||||||||||||
MSR Hedge Gains/(Losses) | 8,773 | (7,171 | ) | 127,240 | (72,104 | ) | (98,290 | ) | |||||||||||||||||||||||
Change in Trading Asset Value | (3,312 | ) | 12 | (13,628 | ) | 3,044 | 8,467 | ||||||||||||||||||||||||
Trading Asset Hedge Gains/(Losses) | 1,226 | (844 | ) | 13,940 | (4,438 | ) | (10,932 | ) | |||||||||||||||||||||||
Option Expense on Servicing Hedges | (9,577 | ) | (7,531 | ) | (4,673 | ) | (4,765 | ) | (3,499 | ) | |||||||||||||||||||||
Total | (20,028 | ) | (5,183 | ) | (10,188 | ) | (8,699 | ) | (8,293 | ) | |||||||||||||||||||||
Total Servicing Income | 3,008 | 11,826 | 15,701 | (727 | ) | 10,717 | |||||||||||||||||||||||||
KEY SERVICING METRICS - ($ in millions) | |||||||||||||||||||||||||||||||
Beginning Servicing Portfolio | $101,370 | $100,246 | $99,304 | $97,303 | $95,284 | ||||||||||||||||||||||||||
Additions to portfolio | 6,237 | 6,333 | 6,238 | 7,332 | 6,797 | ||||||||||||||||||||||||||
Prepayments | (3,645 | ) | (3,909 | ) | (3,476 | ) | (3,725 | ) | (3,278 | ) | |||||||||||||||||||||
Amortization | (696 | ) | (687 | ) | (692 | ) | (687 | ) | (688 | ) | |||||||||||||||||||||
Service Release Sales | (444 | ) | (613 | ) | (1,128 | ) | (919 | ) | (812 | ) | |||||||||||||||||||||
End. Servicing Portfolio (Owned) | $102,822 | $101,370 | �� | $100,246 | $99,304 | $97,303 | |||||||||||||||||||||||||
Avg. Servicing Portfolio (Owned) | $101,992 | $100,811 | $99,484 | $98,342 | $96,147 | ||||||||||||||||||||||||||
Average Loans Serviced (#) | 636,496 | 633,293 | 629,897 | 626,527 | 620,476 | ||||||||||||||||||||||||||
Product Mix (Average) | |||||||||||||||||||||||||||||||
Product Mix (%) | |||||||||||||||||||||||||||||||
GNMA | 8 | % | 8 | % | 8 | % | 8 | % | 9 | % | |||||||||||||||||||||
FNMA/FHLMC | 64 | % | 64 | % | 64 | % | 65 | % | 65 | % | |||||||||||||||||||||
Private | 25 | % | 25 | % | 25 | % | 24 | % | 23 | % | |||||||||||||||||||||
Sub-Total | 97 | % | 97 | % | 97 | % | 97 | % | 97 | % | |||||||||||||||||||||
Warehouse | 3 | % | 3 | % | 3 | % | 3 | % | 3 | % | |||||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||
Other Statistics | |||||||||||||||||||||||||||||||
(Annualized) | |||||||||||||||||||||||||||||||
Ancillary Income per Loan | $49.97 | $47.51 | $45.16 | $43.54 | $44.70 | ||||||||||||||||||||||||||
Servicing Cost per Loan | $49.44 | $49.45 | $49.36 | $50.60 | $53.01 | ||||||||||||||||||||||||||
Portfolio Data | |||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||
Average Servicing Asset ** | 1,505 | 1,452 | 1,532 | 1,503 | 1,350 | ||||||||||||||||||||||||||
Servicing Book Value (bps) | 148 | 144 | 154 | 153 | 140 | ||||||||||||||||||||||||||
Change in MSR Asset / | |||||||||||||||||||||||||||||||
Average Servicing Asset | 19 | % | 18 | % | 17 | % | 20 | % | 18 | % | |||||||||||||||||||||
Run-Off Rate | 17 | % | 18 | % | 17 | % | 18 | % | 17 | % | |||||||||||||||||||||
** Includes valuation reserve/MSRs only |
14
CAPITAL MARKETS Quarterly, Unaudited | |||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | ||||||||||
Net interest (expense)/income | $(2,068 | ) | $781 | $2,906 | $126 | $(725 | ) | ||||||||
Incremental cost of equity | (3,769 | ) | (4,260 | ) | (4,437 | ) | (4,768 | ) | (4,969 | ) | |||||
Net interest expense | (5,837 | ) | (3,479 | ) | (1,531 | ) | (4,642 | ) | (5,694 | ) | |||||
Noninterest income: | |||||||||||||||
Fixed income | 46,313 | 46,235 | 41,503 | 41,843 | 50,602 | ||||||||||
Other product revenue | 42,616 | 49,878 | 56,995 | 62,282 | 46,004 | ||||||||||
Total noninterest income | 88,929 | 96,113 | 98,498 | 104,125 | 96,606 | ||||||||||
Total revenue | 83,092 | 92,634 | 96,967 | 99,483 | 90,912 | ||||||||||
Noninterest expense | 79,726 | 84,075 | 81,778 | 83,629 | 82,601 | ||||||||||
Pretax income | $3,366 | $8,559 | $15,189 | $15,854 | $8,311 | ||||||||||
Efficiency ratio | 96 | % | 91 | % | 84 | % | 84 | % | 91 | % | |||||
Trading inventory (millions) | $2,409 | $2,513 | $2,523 | $2,356 | $2,175 | ||||||||||
Other earning assets (millions) | 1,633 | 1,889 | 2,231 | 2,262 | 2,149 | ||||||||||
Total earning assets (millions) | $4,042 | $4,402 | $4,754 | $4,618 | $4,324 |
Certain previously reported amounts have been reclassified to agree with current presentation.
15
CORPORATE Quarterly, Unaudited | ||||||||||||||||
(Thousands) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||||
Net interest income | $1,930 | $(213 | ) | $(841 | ) | $308 | $(100 | ) | ||||||||
Net interest income from | ||||||||||||||||
deferred compensation | (133 | ) | (123 | ) | (103 | ) | (58 | ) | (63 | ) | ||||||
Total net interest income | 1,797 | (336 | ) | (944 | ) | 250 | (163 | ) | ||||||||
Noninterest income | 3,028 | 3,140 | 1,754 | 341 | (15,631 | ) | ||||||||||
Noninterest income from | ||||||||||||||||
deferred compensation | 1,265 | 8,188 | 6,948 | (5,939 | ) | 5,450 | ||||||||||
Total noninterest income | 4,293 | 11,328 | 8,702 | (5,598 | ) | (10,181 | ) | |||||||||
Security gain/(loss) | 10,273 | 3,002 | 8,757 | 2,893 | (80,281 | ) | ||||||||||
Total revenue | 16,363 | 13,994 | 16,515 | (2,455 | ) | (90,625 | ) | |||||||||
Noninterest expense | 17,391 | 16,806 | 20,069 | 15,154 | 11,997 | |||||||||||
Deferred compensation expense | 2,369 | 10,315 | 8,832 | (5,671 | ) | 7,361 | ||||||||||
Total noninterest expense | 19,760 | 27,121 | 28,901 | 9,483 | 19,358 | |||||||||||
Pretax loss | $(3,397 | ) | $(13,127 | ) | $(12,386 | ) | $(11,938 | ) | $(109,983 | ) |
Certain previously reported amounts have been reclassified to agree with current presentation.
16
CAPITAL HIGHLIGHTS Quarterly, Unaudited | ||||||||||||||
(Dollars in millions, except per share amounts) | 1Q07 | 4Q06 | 3Q06 | 2Q06 | 1Q06 | |||||||||
Tier 1 Capital (a) | $2,738.8 | $2,696.3 | $2,660.2 | $2,612.2 | $2,558.3 | |||||||||
Tier 2 Capital (a) | 1,324.1 | 1,320.1 | 1,338.2 | 1,331.2 | 1,344.5 | |||||||||
Total Capital (a) | $4,062.9 | $4,016.4 | $3,998.4 | $3,943.4 | $3,902.8 | |||||||||
Risk-Adjusted Assets (a) | $31,260.4 | $30,405.4 | $31,583.6 | $30,030.8 | $29,190.9 | |||||||||
Tier 1 Ratio (a) | 8.76 | % | 8.87 | % | 8.42 | % | 8.70 | % | 8.76 | % | ||||
Tier 2 Ratio (a) | 4.24 | 4.34 | 4.24 | 4.43 | 4.61 | |||||||||
Total Capital Ratio (a) | 13.00 | % | 13.21 | % | 12.66 | % | 13.13 | % | 13.37 | % | ||||
Leverage Ratio (a) | 7.17 | % | 6.94 | % | 6.80 | % | 6.86 | % | 6.86 | % | ||||
Shareholders' Equity/Assets Ratio (b) | 6.47 | 6.49 | 6.26 | 6.52 | 6.43 | |||||||||
Book Value | $19.88 | $19.61 | $20.06 | $19.59 | $19.36 |
(a) Current quarter is an estimate
(b) Calculated on period-end balances
17
Note 1 - Financial Glossary |
Appraisal Fees: A fee charged to the borrower for the cost of appraising a property.
Concessions: The net amount of the discount or premium pricing charged to borrowers upon loan origination. This also includes the servicing release premium paid to correspondents to purchase loans. Discount pricing is used to competitively price mortgage loans.
Credit Report Fee: A fee charged to the borrower for the cost of obtaining the borrower’s credit report.
FAS 91 Fee Deferral: The timing difference between collecting and recognizing origination fees on a loan. For loans held for sale, origination fees are recognized at the time the loan is sold, not at the time the loan is originated.
FAS 91 Reclassification: The reclassification of the cost of originating the loans sold during the period.
Final Inspection Fee: A fee charged to the borrower to inspect a property.
Lower of Cost or Market (LOCOM): A method of accounting for certain assets by recording them at the lower of their historical cost or their current market value.
Marketing G/L (Trading Gains): The net result of hedging activities.
Originated Mortgage Servicing Rights (OMSR): The retained right to service a mortgage loan when a mortgage loan is sold on a servicing-retained basis. Represents the present value of the amount by which the estimated future net cash flows from servicing mortgage loans exceeds the cost of servicing mortgage loans.
Origination Fees: A fee charged to the borrower by the lender to originate a loan. Usually stated as a percentage of the face value of the loan.
Servicing Released Premium (SRP): The premium received for selling loans on a servicing released basis.