Exhibit 99.1
FIRST HORIZON NATIONAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31, 2007 | ||||||||||||
First Horizon | ||||||||||||
National | Pro Forma | |||||||||||
Corporation | Pro Forma | Financial | ||||||||||
Historical | Adjustments (a) | Statement | ||||||||||
(Dollars in thousands except per share data)/(Unaudited) | ||||||||||||
Interest income: | ||||||||||||
Interest and fees on loans | $ | 1,621,881 | $ | - | $ | 1,621,881 | ||||||
Interest on investment securities | 188,733 | - | 188,733 | |||||||||
Interest on loans held for sale | 253,587 | (168,820 | ) | 84,767 | ||||||||
Interest on trading securities | 174,188 | (38,578 | ) | 135,610 | ||||||||
Interest on other earning assets | 67,570 | (1,253 | ) | 66,317 | ||||||||
Total interest income | 2,305,959 | (208,651 | ) | 2,097,308 | ||||||||
Interest expense: | ||||||||||||
Interest on deposits: | ||||||||||||
Savings | 115,954 | - | 115,954 | |||||||||
Time deposits | 136,571 | - | 136,571 | |||||||||
Other interest-bearing deposits | 25,852 | - | 25,852 | |||||||||
Certificates of deposit $100,000 and more | 369,313 | - | 369,313 | |||||||||
Interest on trading liabilities | 51,516 | - | 51,516 | |||||||||
Interest on short-term borrowings | 294,074 | (156,389 | ) | 137,685 | ||||||||
Interest on long-term debt | 372,037 | - | 372,037 | |||||||||
Total interest expense | 1,365,317 | (156,389 | ) | 1,208,928 | ||||||||
Net interest income | 940,642 | (52,262 | ) | 888,380 | ||||||||
Provision for loan losses | 272,765 | - | 272,765 | |||||||||
Net interest income after provision for loan losses | 667,877 | (52,262 | ) | 615,615 | ||||||||
Noninterest income: | ||||||||||||
Capital markets | 334,371 | - | 334,371 | |||||||||
Deposit transactions and cash management | 175,271 | - | 175,271 | |||||||||
Mortgage banking | 69,454 | (83,652 | ) | (14,198 | ) | |||||||
Trust services and investment management | 40,335 | - | 40,335 | |||||||||
Insurance commissions | 31,739 | - | 31,739 | |||||||||
Revenue from loan sales and securitizations | 23,881 | - | 23,881 | |||||||||
Equity securities losses, net | (7,475 | ) | - | (7,475 | ) | |||||||
Debt securities gains, net | 6,292 | - | 6,292 | |||||||||
Gains on divestitures | 15,695 | - | 15,695 | |||||||||
All other income and commissions | 170,386 | (18,030 | ) | 152,356 | ||||||||
Total noninterest income | 859,949 | (101,682 | ) | 758,267 | ||||||||
Adjusted gross income after provision for loan losses | 1,527,826 | (153,944 | ) | 1,373,882 | ||||||||
Noninterest expense: | ||||||||||||
Employee compensation, incentives and benefits | 968,122 | (154,539 | ) | 813,583 | ||||||||
Occupancy | 131,173 | (39,815 | ) | 91,358 | ||||||||
Equipment rentals, depreciation and maintenance | 72,926 | (16,921 | ) | 56,005 | ||||||||
Operations services | 74,200 | (7,272 | ) | 66,928 | ||||||||
Communications and courier | 43,909 | (9,222 | ) | 34,687 | ||||||||
Amortization of intangible assets | 10,959 | (2,627 | ) | 8,332 | ||||||||
Goodwill impairment | 84,084 | (62,742 | ) | 21,342 | ||||||||
All other expense | 458,060 | (53,968 | ) | 404,092 | ||||||||
Total noninterest expense | 1,843,433 | (347,106 | ) | 1,496,327 | ||||||||
Loss before income taxes | (315,607 | ) | 193,162 | (122,445 | ) | |||||||
Benefit for income taxes | (140,731 | ) | 74,367 | (66,364 | ) | |||||||
Loss from continuing operations | (174,876 | ) | 118,795 | (56,081 | ) | |||||||
Income from discontinued operations, net of tax | 4,765 | - | 4,765 | |||||||||
Net loss | $ | (170,111 | ) | $ | 118,795 | $ | (51,316 | ) | ||||
Loss per common share from continuing operations | $ | (1.39 | ) | $ | (0.45 | ) | ||||||
Earnings per common share from discontinued operations, net of tax | .04 | .04 | ||||||||||
Loss per common share | $ | (1.35 | ) | $ | (0.41 | ) | ||||||
Diluted loss per common share from continuing operations | $ | (1.39 | ) | $ | (0.45 | ) | ||||||
Diluted earnings per common share from discontinued operations, | ||||||||||||
net of tax | .04 | .04 | ||||||||||
Diluted loss per common share | $ | (1.35 | ) | $ | (0.41 | ) | ||||||
Weighted average common shares | 125,843 | 125,843 | ||||||||||
Diluted average common shares | 125,843 | 125,843 |
See Endnotes.
FIRST HORIZON NATIONAL CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Six Months Ended June 30, 2008 | ||||||||||||
First Horizon | ||||||||||||
National | Pro Forma | |||||||||||
Corporation | Pro Forma | Financial | ||||||||||
Historical | Adjustments (a) | Statement | ||||||||||
(Dollars in thousands except per share data)/(Unaudited) | ||||||||||||
Interest income: | ||||||||||||
Interest and fees on loans | $ | 617,095 | $ | - | $ | 617,095 | ||||||
Interest on investment securities | 79,947 | - | 79,947 | |||||||||
Interest on loans held for sale | 112,655 | (83,987 | ) | 28,668 | ||||||||
Interest on trading securities | 66,078 | (17,303 | ) | 48,775 | ||||||||
Interest on other earning assets | 16,153 | (318 | ) | 15,835 | ||||||||
Total interest income | 891,928 | (101,608 | ) | 790,320 | ||||||||
Interest expense: | ||||||||||||
Interest on deposits: | ||||||||||||
Savings | 44,250 | - | 44,250 | |||||||||
Time deposits | 57,042 | - | 57,042 | |||||||||
Other interest-bearing deposits | 9,462 | - | 9,462 | |||||||||
Certificates of deposit $100,000 and more | 48,429 | - | 48,429 | |||||||||
Interest on trading liabilities | 19,015 | - | 19,015 | |||||||||
Interest on short-term borrowings | 119,474 | (58,358 | ) | 61,116 | ||||||||
Interest on long-term debt | 127,269 | - | 127,269 | |||||||||
Total interest expense | 424,941 | (58,358 | ) | 366,583 | ||||||||
Net interest income | 466,987 | (43,250 | ) | 423,737 | ||||||||
Provision for loan losses | 460,000 | - | 460,000 | |||||||||
Net interest income/(loss) after provision for loan losses | 6,987 | (43,250 | ) | (36,263 | ) | |||||||
Noninterest income: | ||||||||||||
Capital markets | 253,795 | - | 253,795 | |||||||||
Deposit transactions and cash management | 89,350 | - | 89,350 | |||||||||
Mortgage banking | 331,130 | (232,268 | ) | 98,862 | ||||||||
Trust services and investment management | 17,992 | - | 17,992 | |||||||||
Insurance commissions | 14,966 | - | 14,966 | |||||||||
Revenue from loan sales and securitizations | (11,081 | ) | - | (11,081 | ) | |||||||
Equity securities gains, net | 64,043 | - | 64,043 | |||||||||
Debt securities gains, net | 931 | - | 931 | |||||||||
Gains on divestitures | (1,424 | ) | - | (1,424 | ) | |||||||
All other income and commissions | 88,420 | (13,102 | ) | 75,318 | ||||||||
Total noninterest income | 848,122 | (245,370 | ) | 602,752 | ||||||||
Adjusted gross income after provision for loan losses | 855,109 | (288,620 | ) | 566,489 | ||||||||
Noninterest expense: | ||||||||||||
Employee compensation, incentives and benefits | 564,548 | (149,924 | ) | 414,624 | ||||||||
Occupancy | 58,609 | (19,646 | ) | 38,963 | ||||||||
Equipment rentals, depreciation and maintenance | 33,279 | (7,247 | ) | 26,032 | ||||||||
Operations services | 38,088 | (3,826 | ) | 34,262 | ||||||||
Communications and courier | 22,481 | (6,813 | ) | 15,668 | ||||||||
Amortization of intangible assets | 4,622 | (1,013 | ) | 3,609 | ||||||||
All other expense | 182,493 | (50,066 | ) | 132,427 | ||||||||
Total noninterest expense | 904,120 | (238,535 | ) | 665,585 | ||||||||
Loss before income taxes | (49,011 | ) | (50,085 | ) | (99,096 | ) | ||||||
Benefit for income taxes | (36,967 | ) | (19,283 | ) | (56,250 | ) | ||||||
Loss from continuing operations | (12,044 | ) | (30,802 | ) | (42,846 | ) | ||||||
Income from discontinued operations, net of tax | 883 | - | 883 | |||||||||
Net loss | $ | (11,161 | ) | $ | (30,802 | ) | $ | (41,963 | ) | |||
Loss per common share from continuing operations | $ | (0.08 | ) | $ | (0.29 | ) | ||||||
Earnings per common share from discontinued operations, net of tax | .01 | .01 | ||||||||||
Loss per common share | $ | (0.07 | ) | $ | (0.28 | ) | ||||||
Diluted loss per common share from continuing operations | $ | (0.08 | ) | $ | (0.29 | ) | ||||||
Diluted earnings per common share from discontinued operations, | ||||||||||||
net of tax | .01 | .01 | ||||||||||
Diluted loss per common share | $ | (0.07 | ) | $ | (0.28 | ) | ||||||
Weighted average common shares | 148,898 | 148,898 | ||||||||||
Diluted average common shares | 148,898 | 148,898 |
See Endnotes.
FIRST HORIZON NATIONAL CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF CONDITION
June 30, 2008 | |||||||||||||||||
First Horizon | Reversal of | Pro Forma | |||||||||||||||
National | Divestiture | Pro Forma | Financial | ||||||||||||||
Corporation | Accounts (b) | Adjustments | Statement | ||||||||||||||
(Dollars in thousands)/(Unaudited) | |||||||||||||||||
Assets: | |||||||||||||||||
Cash and due from banks | $ | 838,376 | $ | - | $ | (24,606 | ) | (c) | $ | 986,030 | |||||||
- | 172,260 | (d) | |||||||||||||||
Federal funds sold and securities | - | ||||||||||||||||
purchased under agreements to resell | 1,166,982 | - | - | 1,166,982 | |||||||||||||
Total cash and cash equivalents | 2,005,358 | - | 147,654 | 2,153,012 | |||||||||||||
Interest-bearing deposits with other financial institutions | 39,829 | - | - | 39,829 | |||||||||||||
Trading securities | 1,473,815 | 89,239 | (92,482 | ) | (c) | 1,470,572 | |||||||||||
Trading securities-divestiture | 89,239 | (89,239 | ) | - | - | ||||||||||||
Loans held for sale | 2,554,030 | - | - | 2,554,030 | |||||||||||||
Securities available for sale | 2,896,688 | - | - | 2,896,688 | |||||||||||||
Securities held to maturity | 240 | - | - | 240 | |||||||||||||
Loans, net of unearned income | 22,225,232 | - | - | 22,225,232 | |||||||||||||
Less: Allowance for loan losses | 575,149 | - | - | 575,149 | |||||||||||||
Total net loans | 21,650,083 | - | - | 21,650,083 | |||||||||||||
Mortgage servicing rights, net | 903,634 | 235,761 | (233,162 | ) | (c) | 906,233 | |||||||||||
Mortgage servicing rights-divestiture | 235,761 | (235,761 | ) | - | - | ||||||||||||
Goodwill | 192,408 | - | - | 192,408 | |||||||||||||
Other intangible assets, net | 48,615 | - | - | 48,615 | |||||||||||||
Capital markets receivables | 994,571 | - | - | 994,571 | |||||||||||||
Premises and equipment, net | 344,410 | 31,994 | (29,691 | ) | (c) | 346,713 | |||||||||||
Real estate acquired by foreclosure | 141,857 | - | - | 141,857 | |||||||||||||
Other assets | 1,908,795 | 38,634 | (59,361 | ) | (c) | 1,890,004 | |||||||||||
1,936 | (f) | ||||||||||||||||
Other assets-divestiture | 70,628 | (70,628 | ) | - | - | ||||||||||||
Total assets | $ | 35,549,961 | $ | - | $ | (265,106 | ) | $ | 35,284,855 | ||||||||
Liabilities and shareholders' equity: | |||||||||||||||||
Deposits: | |||||||||||||||||
Savings | $ | 4,041,352 | $ | - | $ | - | $ | 4,041,352 | |||||||||
Time deposits | 2,468,521 | - | - | 2,468,521 | |||||||||||||
Other interest-bearing deposits | 1,880,678 | - | - | 1,880,678 | |||||||||||||
Certificates of deposit $100,000 and more | 1,953,432 | - | - | 1,953,432 | |||||||||||||
Interest-bearing | 10,343,983 | - | - | 10,343,983 | |||||||||||||
Noninterest-bearing | 4,453,332 | 296,632 | (231,971 | ) | (c) | 4,517,993 | |||||||||||
Noninterest-bearing-divestiture | 296,632 | (296,632 | ) | - | - | ||||||||||||
Total deposits | 15,093,947 | - | (231,971 | ) | 14,861,976 | ||||||||||||
Federal funds purchased and securities | |||||||||||||||||
sold under agreements to repurchase | 2,620,014 | - | - | 2,620,014 | |||||||||||||
Trading liabilities | 464,225 | - | - | 464,225 | |||||||||||||
Commercial paper and other short-term borrowings | 5,998,810 | - | - | 5,998,810 | |||||||||||||
Term borrowings | 5,783,407 | - | - | 5,783,407 | |||||||||||||
Other collateralized borrowings | 767,010 | - | - | 767,010 | |||||||||||||
Total long-term debt | 6,550,417 | - | - | 6,550,417 | |||||||||||||
Capital markets payables | 868,883 | �� | - | 868,883 | |||||||||||||
Other liabilities | 959,476 | 1,466 | (25,946 | ) | (c) | 942,253 | |||||||||||
(9,043 | ) | (e) | |||||||||||||||
16,300 | (f) | ||||||||||||||||
Other liabilities-divestiture | 1,466 | (1,466 | ) | - | - | ||||||||||||
Total liabilities | 32,557,238 | - | (250,660 | ) | 32,306,578 | ||||||||||||
Preferred stock of subsidiary | 295,277 | - | - | 295,277 | |||||||||||||
Shareholders' equity | |||||||||||||||||
Preferred stock - no par value (5,000,000 shares authorized, but unissued) | - | - | - | - | |||||||||||||
Common stock | 122,345 | - | - | 122,345 | |||||||||||||
Capital surplus | 980,428 | - | - | 980,428 | |||||||||||||
Undivided profits | 1,646,272 | - | (14,446 | ) | (g) | 1,631,826 | |||||||||||
Accumulated other comprehensive (loss)/income, net | (51,599 | ) | - | - | (51,599 | ) | |||||||||||
Total shareholders' equity | 2,697,446 | - | (14,446 | ) | 2,683,000 | ||||||||||||
Total liabilities and shareholders' equity | $ | 35,549,961 | $ | - | $ | (265,106 | ) | $ | 35,284,855 |
First Horizon National Corporation
Endnotes to the Pro Forma Financial Statements
(a) | Represents the carve out of origination activities and servicing platform sold to MetLife, the |
associated subservicing agreement, and the sale of servicing rights related to first lien mortgage loans. | |
The associated unpaid principal balance was approximately $20 billion as of June 30, 2008. | |
(b) | Divestiture account balances as of June 30, 2008 were based on the best estimates of assets and |
liabilities expected to be transferred. Amounts are reversed to the original accounts so that the | |
pro forma adjustments will reflect the actual assets and liabilities being transferred as if the | |
transaction occurred on June 30, 2008. | |
(c) | Adjustment reflects the assets and liabilities being transferred to MetLife as if the transaction |
occurred on June 30, 2008. | |
(d) | Reflects cash that would have been received for net assets transferred to MetLife as if the |
transaction occurred on June 30, 2008. | |
(e) | Reflects the net tax effect of the transaction, determined using the statutory rate, as if the |
sale occurred on June 30, 2008. | |
(f) | Reflects assets and liabilities recognized related to the transaction. |
(g) | Represents the loss on sale, net of related tax effect determined at the statutory rate, that would |
have been recognized had the sale occurred on June 30, 2008. |