EXHIBIT 99.1
MEMPHIS, Tenn., Jan. 19, 2010 (GLOBE NEWSWIRE) -- First Horizon National Corp. (NYSE:FHN) ended 2009 with overall credit quality improving as the company continued to reposition itself for long-term profitability. Despite a loss for the quarter amid a challenging economy, FHN remains on track. First Horizon saw good growth in average core deposits, expansion in its net interest margin and further contraction of the balance sheet that resulted in reduced exposure to wind-down businesses.
Key items in fourth-quarter results included:
“Although challenging, 2009 was a year of positive change for First Horizon,” said Bryan Jordan, FHN CEO. “Looking beyond our bottom-line fourth quarter and full-year losses, we made significant progress in executing our strategic plan to reposition First Horizon for consistent long-term profitability.”
| Key Performance Ratios & Other Data | 4Q09 Change vs. | ||||
| (Shares in thousands)/(Unaudited) | 4Q09 | 3Q09 | 4Q08 | 3Q09 | 4Q08 |
| Diluted EPS (a) | (0.32) | (0.24) | (0.29) | (33)% | (11)% |
| Diluted shares (a) | 220,438 | 220,438 | 220,312 | * | * |
| Period-end shares outstanding (a) | 221,980 | 221,927 | 220,745 | * | 1 % |
| Return on average assets (annualized) | (0.79)% | (0.52)% | (0.66)% | ||
| Return on average common equity (annualized) | (12.25)% | (9.02)% | (9.30)% | ||
| Net interest margin | 3.19% | 3.14% | 2.96% | ||
| Efficiency ratio | 89.51% | 70.73% | 62.97% | ||
| FTE employees | 5,731 | 5,837 | 6,095 | (2)% | (6)% |
| * Amount is less than one percent. | |||||
| Certain previously reported amounts have been reclassified to agree with current presentation. | |||||
| (a) Shares restated for stock dividends distributed through January 1, 2010 | |||||
PERFORMANCE HIGHLIGHTS
In fourth quarter, FHN executed transactions as part of management’s ongoing strategic refocus that resulted in combined net pre-tax charges of $31.2 million. These actions are expected to benefit our strategic plan execution and ultimately contribute to profitability. Additionally, provision for mortgage foreclosure and repurchase obligations increased significantly from the third quarter. These charges, combined with a sequential quarter contraction in fee income and a $50.0 million improvement in loan loss provision, resulted in a net loss available to common shareholders of $70.6 million in the fourth quarter 2009, a $17.7 million loss increase from the third quarter. The results of FTN Financial’s institutional equity research business are reflected in discontinued operations, net of tax, for all periods presented. The third quarter included higher gains on the repurchase of bank debt and a reversal in a portion of the Visa contingent liability.
For the year, FHN’s net loss available to common shareholders increased to $329.4 million from $199.4 million in 2008. The substantial decline in year-over-year fee income due to a reduction in mortgage banking income, reflecting the 2008 divestiture of FHN’s national mortgage banking business, was partially mitigated by Capital Markets’ record performance in 2009. While foreclosure and repurchase losses, as well as FDIC premiums increased from 2008, overall expenses improved by 3.0 percent from 2008 benefiting from the divestiture of the national mortgage business and a decline in restructuring, repositioning and efficiency initiatives costs.
| Income Statement Highlights | 4Q09 Change vs. | ||||
| (Thousands)/(Unaudited) | 4Q09 | 3Q09 | 4Q08 | 3Q09 | 4Q08 |
| Net interest income | $189,894 | $190,901 | $204,948 | (1)% | (7)% |
| Noninterest income | 246,184 | 303,818 | 326,367 | (19)% | (25)% |
| Total revenue | 436,078 | 494,719 | 531,315 | (12)% | (18)% |
| Noninterest expense | 390,343 | 349,901 | 334,569 | 12 % | 17 % |
| Provision for loan losses | 135,000 | 185,000 | 280,000 | (27)% | (52)% |
| Loss before income taxes | (89,265) | (40,182) | (83,254) | (122)% | (7)% |
| Benefit for income taxes | (38,111) | (15,368) | (31,317) | (148)% | (22)% |
| Loss from continuing operations | (51,154) | (24,814) | (51,937) | (106)% | 2 % |
| Income/(loss) from discontinued operations, net of tax | (1,690) | (10,200) | 442 | 83 % | NM |
| Net loss | (52,844) | (35,014) | (51,495) | (51)% | (3)% |
| Net income attributable to noncontrolling interest | 2,839 | 2,969 | 4,236 | (4)% | (33)% |
| Net loss attributable to controlling interest | (55,683) | (37,983) | (55,731) | (47)% | * |
| Preferred stock dividends | 14,897 | 14,876 | 7,413 | * | 101 % |
| Loss available to common shareholders | $(70,580) | $(52,859) | $(63,144) | (34)% | (12)% |
| * Amount is less than one percent. | |||||
Certain previously reported amounts have been reclassified to agree with current presentation. | |||||
Wind-down of the national loan portfolios remains on track contributing to the period-end asset decline of $400 million from the previous quarter and a $5 billion decline from year-end 2008. Despite soft overall loan demand, the Commercial & Industrial portfolio experienced modest growth in the fourth quarter, primarily from increased mortgage warehouse lending as FHN continues to actively seek quality lending opportunities among new and existing customers. Average core deposits increased by $350 million, or 3 percent, from third quarter and the net interest margin expanded for the third consecutive quarter, to 3.19 percent from 3.14, reflecting an improved funding mix as well as enhanced deposit and loan pricing discipline. FHN’s capital ratios remain among industry leaders, with tier 1 and tangible common equity to tangible assets at 16.28 percent and 7.75 percent, respectively.
| Balance Sheet Highlights & Ratios | 4Q09 Change vs. | ||||
| (Period End, Thousands)/(Unaudited) | 4Q09 | 3Q09 | 4Q08 | 3Q09 | 4Q08 |
| Total loans, net of unearned income | $18,123,884 | $18,524,685 | $21,278,190 | (2)% | (15)% |
| Total deposits | 14,867,215 | 14,234,983 | 14,241,814 | 4 % | 4 % |
| Total assets | 26,068,678 | 26,465,852 | 31,021,980 | (2)% | (16)% |
| Total liabilities | 22,766,210 | 23,095,643 | 27,447,348 | (1)% | (17)% |
| Total equity | 3,302,468 | 3,370,209 | 3,574,632 | (2)% | (8)% |
| Book value per common share | $9.95 | $10.28 | $11.31 | ||
| Tangible book value per common share (a) | 9.03 | 9.29 | 10.23 | ||
(a) Refer to the Non-GAAP to GAAP Reconciliation at the end of this release. | |||||
Declining NPAs and Net Charge-offs, Reserve Decrease, Commercial Loan Deterioration
Nonperforming assets were down 14 percent linked-quarter – marking the third consecutive quarterly decline. The improvement reflects reduced national construction balances, declining gross in-flows and an active disposition program. Loan loss provision and allowance for loan losses each dropped by approximately $50 million from third quarter, resulting in a 4.95 percent allowance to loans ratio at period-end. The national construction portfolios experienced a fourth quarter reserve decrease that more than offset an increase in reserves on the C&I and Permanent Mortgage portfolios. Charge-offs also fell in the fourth quarter to $182.9 million, or an annualized 4.00 percent of average loans, from third quarter’s $201.7 million. While overall credit quality has improved, the Commercial Real Estate and certain exposures in the C&I portfolio have experienced incremental credit deterioration.
| Asset Quality Highlights | 4Q09 Change vs. | ||||
| (Thousands)/(Unaudited) | 4Q09 | 3Q09 | 4Q08 | 3Q09 | 4Q08 |
| Allowance for loan losses | $896,914 | $944,765 | $849,210 | (5)% | 6 % |
| Allowance / period-end loans | 4.95% | 5.10% | 3.99% | ||
| Net charge-offs | $182,851 | $201,718 | $191,246 | (9)% | (4)% |
| Net charge-offs (annualized) / average loans | 4.00% | 4.24% | 3.61% | ||
| Non-performing assets (NPA) | $1,051,393 | $1,220,489 | $1,157,957 | (14)% | (9)% |
| NPA % (a) | 5.56% | 6.38% | 5.38% | ||
| (a) NPAs related to the loan portfolio over period-end loans plus foreclosed real estate and other assets. | |||||
BUSINESS PERFORMANCE REVIEW
The Regional Bank’s results improved on a $20 million reduction in loan loss provision expense. Noninterest expense declined by $15.1 million as foreclosure losses, personnel costs and credit losses on customer derivatives all declined. The bank’s continued focus on growing core deposits resulted in a fourth quarter increase of $400 million. Improved commercial loan pricing and reduced low yield commercial loan balances helped boost net interest margin to 4.97 percent from 4.80 percent in third quarter.
In Capital Markets, fixed income sales revenue remained strong at $111.0 million compared to $120.5 million in the prior quarter, reflecting a 5 percent decline in average daily revenue as market conditions continued to normalize. While Capital Markets’ pre-tax income improved from a $30 million sequential quarter decline in loan loss provision, the bank holding company and trust preferred loan portfolios experienced incremental deterioration in the fourth quarter.
Net pre-tax charges on activities related to restructuring, repositioning and efficiency initiatives increased to $31.2 million from $15.7 million, driving Corporate’s results down from the prior quarter. In the fourth quarter, FHN executed on several efficiency efforts, including the divestiture of two non-strategic businesses and contract cancellations that triggered termination costs and asset write-offs. Third quarter included larger gains on the repurchase of debt and a pre-tax $14.0 million goodwill impairment reflected in discontinued operations.
Mortgage Banking’s results declined on a sizeable increase in legacy mortgage foreclosure and repurchase provision, an increase in loan loss provision on the Permanent Mortgage portfolio and lower mortgage banking fee income. The decline in mortgage banking fee income was due to a negative fair value adjustment on the mortgage warehouse and a decline in positive hedging results on the MSR. National Specialty Lending’s pre-tax loss contracted to $61.8 million from $72.0 million. Loan loss provision declined as the wind-down of the national portfolios remains on track.
USE OF NON-GAAP MEASURES
Certain capital-related non-GAAP measures are included in the text and tables in this release. FHN’s management believes such measures are relevant to understanding the capital position and results of the company. The non-GAAP items presented in this release are tangible common equity to tangible assets and tangible book value per common share. These measures are reported to FHN’s management and board of directors through various internal reports. Additionally, disclosure of the non-GAAP capital ratios provide a meaningful base for comparability to other financial institutions as these ratios have become an important measure of the capital strength of banks as demonstrated by the inclusion in the stress tests administered by the United States Treasury Department under the Capital Assistance Program. Non-GAAP measures are not formally defined by GAAP or codified in the federal banking regulations, and other entities may use calculation methods that differ from those use d by FHN. Refer to the tabular reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items at the end of this release.
OTHER INFORMATION
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, recent and future legislative and regulatory 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 and slide presentation, which will be available on FHN’s Web site at www.fhnc.com.
Management will host a conference call at 8:00 a.m. Central Time Jan. 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 Jan. 19 by dialing 1-888-428-9506 (international participants dial 1-719-325-2260). The conference will also be webcast live through First Horizon’s Web site and will be accompanied by the slide presentation. To access the webcast and the slide presentation, visit the investor relations section of www.fhnc.com. A replay of the call will be available from 11 a.m. Central Time Jan. 19 until 11 p.m. Jan. 27 by calling 1-888-203-1112 or 1-719-457-0820 for international participants. The passcode is 7397664. The event also will be archived and made available for two weeks beginning at 1 p.m. Central Time Jan. 19 in the investor relations section of First Horizon’s Web site at www.fhnc.com. For four weeks from the press release date, FHN will respond to in dividual 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 approximately 5,700 employees of First Horizon National Corp. (NYSE:FHN) provide financial services through about 180 bank locations in and around Tennessee and 21 FTN Financial Group offices in the U.S. and abroad. First Tennessee has the leading combined market deposit share in the 17 Tennessee counties where it does business and one of the highest customer retention rates of any bank in the country. FTN Financial is an industry leader in fixed income sales, trading and strategies for institutional clients in the U.S. and abroad. FHN has been recognized as one of the nation’s best employers by AARP and Working Mother magazines. More information can be found at www.fhnc.com.
FHN-G
| NON-GAAP TO GAAP RECONCILIATION | |||
| Quarterly, Unaudited | |||
| (Millions) | 4Q09 | 3Q09 | 4Q08 |
| Tangible Common Equity (Non-GAAP) | |||
| (A) Total equity (GAAP) | $3,302.5 | $3,370.2 | $3,574.6 |
| Less: Preferred stock capital surplus - CPP | 798.7 | 794.6 | 785.7 |
| Less: Noncontrolling interest (a) | 295.2 | 295.2 | 295.2 |
| (B) Total common equity | $2,208.6 | $2,280.4 | $2,493.7 |
| Less: Intangible assets (GAAP) (b) | 203.8 | 218.9 | 237.5 |
| (C) Tangible common equity (Non-GAAP) | $2,004.8 | $2,061.5 | $2,256.2 |
| Tangible Assets (Non-GAAP) | |||
| (D) Total assets (GAAP) | $26,068.7 | $26,465.9 | $31,022.0 |
| Less: Intangible assets (GAAP) (b) | 203.8 | 218.9 | 237.5 |
| (E) Tangible assets (Non-GAAP) | $25,864.9 | $26,247.0 | $30,784.5 |
| Period-end Shares Outstanding | |||
| (F) Period-end shares outstanding | 222.0 | 221.9 | 220.7 |
| Ratios | |||
| (C)/(E) Tangible common equity to tangible assets (TCE/TA) (Non-GAAP) | 7.75% | 7.85% | 7.34% |
| (A)/(D) Total equity to total assets (GAAP) | 12.67% | 12.73% | 11.52% |
| (C)/(F) Tangible book value per common share (Non-GAAP) | $9.03 | $9.29 | $10.22 |
| (B)/(F) Book value per common share (GAAP) | $9.95 | $10.28 | $11.31 |
| (a) Included in total equity on the consolidated balance sheets. | |||
| (b) Includes goodwill and other intangible assets, net of amortization. |
CONTACT: First Horizon National Corporation
Media Information:
Anthony Hicks
(901) 523-4726
Investor Relations:
Aarti Bowman
(901) 523-4017