EXHIBIT 99.1
First Horizon National Corporation Announces Financial Results for Second Quarter 2007
Company Expects Further Efficiency Gains, Continued Improvements to Businesses
MEMPHIS, Tenn., July 18, 2007 (PRIME NEWSWIRE) -- First Horizon National Corporation (NYSE:FHN) announced earnings for the quarter ended June 30, 2007, and other matters, including these highlights:
* Earnings of $22.2 million or $.17 per diluted share compared to
first quarter 2007 earnings of $70.5 million or $.55 per diluted
share
* Progress in implementation of earnings enhancement initiatives
raises total expected benefits to $175 million and results in $39.3
million of second quarter pre-tax charges
* Capital Markets shows earnings increase from improvement in revenues
and expenses
* Legal settlements result in $5.4 million net reduction in pre-tax
earnings
* Additional provisioning reflects asset quality trends; net
charge-offs decline to 41 basis points
* Continuing implementation of productivity and performance
enhancement measures will result in additional charges throughout
remainder of 2007 with up to $60 million estimated to date
* Pursuing sale of 34 full-service First Horizon Bank branches in
Atlanta, Baltimore, Dallas and Northern Virginia
Pre-tax income for FHN was $18.1 million in second quarter 2007 compared to $89.1 million in first quarter 2007. Total revenues were $519.8 million in second quarter compared to $520.6 million in first quarter 2007. Noninterest expenses were $457.3 million compared to $403.0 million in first quarter 2007. Provision for loan losses increased $15.9 million to $44.4 million in second quarter 2007.
In second quarter 2007 average total loans grew 1 percent from first quarter 2007. Total average deposits grew 2 percent for the same time period.
"The combination of a challenging operating environment and charges related to the implementation of various initiatives to improve our cost structure resulted in earnings that were far from satisfactory," said Jerry Baker, CEO of FHN. "My commitment when taking over as CEO in first quarter was to get First Horizon back on track by systematically reviewing our businesses, refocusing our strategy, and improving the productivity and efficiency of the organization. We have made meaningful progress on this front, but there is more to do.
"We remain committed to taking the additional actions necessary to achieve our savings targets. To that end, we initially established an objective for the second and third phases of $90 million in earnings improvements and now expect this figure to be closer to $125 million and fully experienced in our run-rate by first quarter 2008.
"Our continued market share gains in Tennessee reflect the success of our strategy to focus investments on this important market. At the same time, we've decided to no longer invest in a portion of our national strategy that is likely to remain unprofitable in the near term. Accordingly, we are pursuing the sale, closure or consolidation of First Horizon Bank branches in our four national full-service banking markets. This allows us to focus on the profitable elements of our national strategy, including specialty banking and cross-selling products to our mortgage customers," concluded Baker.
PERFORMANCE HIGHLIGHTS (Second Quarter 2007 vs. First Quarter 2007)
Retail/Commercial Bank Investing in Tennessee
Pre-tax income for Retail/Commercial Banking was $81.5 million for second quarter 2007, compared to $100.4 million for first quarter 2007. Results for the current quarter were affected by additional provisioning for loan losses and compression of the net interest margin driven by challenges in the national housing market. Investments in marketing and deposit pricing in Tennessee were slightly offset by seasonal increases in deposit transaction fees.
Mortgage Banking Production Rises, Negatively Impacted by Margin Compression and Litigation
Mortgage Banking had a pre-tax loss of $16.1 million for second quarter 2007, compared to pre-tax loss of $11.3 million for first quarter 2007. Results for the quarter included the recognition of $8.4 million of increased expense related to a previously disclosed legal settlement as a higher number of claims were received by the end of the claims period than projected. Seasonality favorably impacted net interest income from higher average warehouse volume and higher custodial balances. Increased origination and delivery volumes over prior quarter resulted in higher net origination income. These impacts of seasonality were negatively affected by a decline in gain on sale margins. Hedging results improved in second quarter 2007 as compared to first quarter 2007.
Earnings Improvements in Capital Markets
Pre-tax earnings for Capital Markets were $12.7 million in second quarter 2007 compared to $3.4 million in first quarter 2007. Results for Capital Markets were favorably affected by a $3.0 million legal settlement, improvements in net interest expense, a slight increase in fixed income revenues, and decreases in noninterest expenses.
Corporate Segment Reflects One-Time Charges
Results for second quarter 2007 include $39.3 million of expenses associated with implementation of restructuring, repositioning and efficiency initiatives. These initiatives include:
* Organizational and compensation changes for right sizing operating
segments and consolidating functional areas
* Procurement centralization and multi-sourcing back office functions
* Repositioning non-core businesses, including redesigned non-prime
mortgage origination business and exit from coin merchandising
* Other efforts, including facilities consolidation and divesting
certain loan portfolios
Charge-Offs Decrease Sequentially; Provision Increases as Nonperforming Assets Rise
The net charge-off ratio decreased to 41 basis points in second quarter 2007 from 48 basis points in first quarter 2007 as net charge-offs declined to $23.0 million from $26.6 million in first quarter 2007. Provision for loan losses increased to $44.4 million in second quarter 2007 from $28.5 million in first quarter 2007, with the increase split between recognition of $7.7 million of losses for a non-strategic loan portfolio that was sold during the quarter and additional provisioning. Excluding the impact of the sold loans, the provision would have been $36.7 million for second quarter 2007. The nonperforming asset ratio increased to 81 basis points in second quarter 2007 from 56 basis points in first quarter 2007.
OTHER INFORMATION
The financial supplement will be available on First Horizon's web site at 6:00 am Central Time, Thursday, July 19, 2007.
This press release contains forward-looking statements involving significant risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking information. Those factors include general economic and financial market conditions, including expectations of and actual timing and amount of interest rate movements including the slope of the yield curve, competition, customer and investor responses to these conditions, ability to execute business plans, geopolitical developments, natural disasters, and items already mentioned in this press release, as well as critical accounting estimates and other factors described in FHN's recent filings with the SEC. FHN disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements included herein or therein to reflect future events or developments.
FHN provides additional disclosure and discussion related to FHN's earnings and business segment performance through a financial supplement, which is available on FHN's Web site at www.fhnc.com. Management will also host a conference call at 8:00 a.m. Central Time July 19 to review earnings and performance trends. Callers wishing to participate in the call may dial toll-free starting at 7:45 a.m. Central Time July 19 by dialing 1-877-502-9274 (international participants dial 1-913-981-5584). The conference will also be webcast live through First Horizon's web site. To access the webcast, visit the investor relations section of www.fhnc.com. A replay of the call will be available from 11 a.m. Central Time July 19 until 11 p.m. August 2 by calling 1-888-203-1112 or 1-719-457-0820 for international participants. The passcode is 7254849. The event will be archived and made available by 1 p.m. Central Time July 19 in the investor relations section of First Horizon's Web site at www.fhnc.com. For four weeks f rom the press release date, FHN will respond to individual requests for clarification of the provided disclosures. However, we will make every effort not to provide, and you should not expect to receive, material non-public information as that term is defined in the SEC Regulation FD. Without limiting the foregoing, after the conference call and except for the guidance expressed or implied herein or therein, we will not provide any earnings guidance, directly or indirectly, express or implied.
GENERAL INFORMATION
About First Horizon
The 12,000 employees of First Horizon National Corp. (NYSE:FHN) provide financial services to individuals and business customers through hundreds of offices located in more than 40 states. The corporation's three major brands -- FTN Financial, First Horizon and First Tennessee -- provide customers with a broad range of products and services including:
* Capital markets, one of the nation's top underwriters of U.S.
government agency securities
* Mortgage banking, one of the nation's top mortgage originators and
recipient of consecutive awards for servicing excellence from Fannie
Mae and Freddie Mac
* Retail/commercial banking, with the largest market share in
Tennessee and one of the highest customer retention rates of any
bank in the country
FHN companies have been recognized as some of the nation's best employers by AARP, Working Mother and Fortune magazines. FHN also was named one of the nation's 100 best corporate citizens by CRO magazine. More information can be found at www.fhnc.com.
SUMMARY QUARTERLY RESULTS
Quarterly, Unaudited
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(Thousands) 2Q07 1Q07 4Q06
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INCOME STATEMENT
HIGHLIGHTS
Net interest income $ 239,432 $ 237,419 $ 245,997
Noninterest income 281,313 272,915 313,342
Securities (losses)
/gains, net (1,014) 10,273 3,002
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Total revenue 519,731 520,607 562,341
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Noninterest expense 457,240 403,012 431,630
Provision 44,408 28,486 22,983
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Pretax income/(loss) 18,083 89,109 107,728
(Benefit)/provision
for income taxes (3,861) 18,802 31,448
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Income from
continuing
operations 21,944 70,307 76,280
Income/(loss) from
discontinued
operations, net of
tax 179 240 187
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Net income $ 22,123 $ 70,547 $ 76,467
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COMMON STOCK DATA
Diluted EPS from
continuing operations $ .17 $ .55 $ .60
Diluted EPS .17 .55 .60
Diluted shares 128,737 128,704 127,784
Period-end shares
outstanding 126,237 125,749 124,866
Dividends declared
per share $ .45 $ .45 $ .45
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BALANCE SHEET HIGHLIGHTS
(PERIOD END)
Total loans,
net of
unearned income $22,382,303 $22,268,190 $22,104,905
Total deposits 21,761,683 22,491,951 20,213,232
Total assets 38,394,084 38,828,766 37,918,259
Total liabilities 35,635,325 36,018,813 35,160,599
Total shareholders'
equity 2,463,482 2,514,676 2,462,390
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KEY RATIOS & OTHER
Return on average
assets .23% .74% .77%
Return on average
equity 3.57% 11.61% 12.08%
Net interest margin 2.79% 2.84% 2.85%
Efficiency ratio 88.0% 77.4% 76.8%
FTE employees 11,903 12,018 12,131
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2Q07 Change vs.
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(Thousands) 3Q06 2Q06 1Q07 2Q06
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INCOME STATEMENT
HIGHLIGHTS
Net interest income $ 251,621 $ 253,598 1 % (6)%
Noninterest income 309,170 332,119 3 % (15)%
Securities (losses)
/gains, net 8,757 2,893 NM NM
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Total revenue 569,548 588,610 * (12)%
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Noninterest expense 452,899 423,011 13 % 8 %
Provision 23,694 18,653 56 % 138 %
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Pretax income/(loss) 92,955 146,946 (80)% (88)%
(Benefit)/provision
for income taxes 25,776 43,013 (121)% (109)%
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Income from
continuing
operations 67,179 103,933 (69)% (79)%
Income/(loss) from
discontinued
operations, net of
tax (69) 376 (25)% (52)%
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Net income $ 67,110 $ 104,309 (69)% (79)%
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COMMON STOCK DATA
Diluted EPS from
continuing operations $ .53 $ .82 (69)% (79)%
Diluted EPS .53 .82 (69)% (79)%
Diluted shares 127,523 127,280 * 1 %
Period-end shares
outstanding 124,467 123,947 * 2 %
Dividends declared
per share $ .45 $ .45 -- --
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BALANCE SHEET HIGHLIGHTS
(PERIOD END)
Total loans,
net of
unearned income $21,955,030 $21,717,264 1 % 3 %
Total deposits 25,284,541 21,693,442 (3)% *
Total assets 40,076,183 37,469,234 (1)% 2 %
Total liabilities 37,270,385 34,731,767 (1)% 3 %
Total shareholders'
equity 2,510,524 2,442,193 (2)% 1 %
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KEY RATIOS & OTHER
Return on average
assets .67% 1.09%
Return on average
equity 10.90% 17.42%
Net interest margin 2.89% 2.99%
Efficiency ratio 79.5% 71.9%
FTE employees 12,324 12,413 (1)% (4)%
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NM - Not meaningful
* Amount is less than one percent.
CONTACT: First Horizon National Corporation
Media Information:
Kim Cherry
(901) 523-4726
Investor Relations:
Dave Miller
(901) 523-4162
