-- Retail/Commercial Banking pre-tax income increased 36 percent to
$118.7 million
-- Loans grew 19 percent led by commercial loan growth of
26 percent
-- Core deposits grew 12 percent over first quarter 2004 to
$11.5 billion
-- Net charge-off ratio decreased to 17 basis points from 34 basis
points last year
-- Home purchase related originations grew 39 percent and
represented 53 percent of total originations
-- Capital markets non-depository revenues surpassed depository
revenues, comprising 56 percent of total fixed income revenues
-- Return on equity was 21.8 percent and return on assets was 1.30
percent
-- Diluted earnings per share were $.85, up from $.81 in fourth
quarter 2004
MEMPHIS, Tenn., April 21, 2005 (PRIMEZONE) -- First Horizon National Corporation (FHN) announced earnings of $109.2 million, or $.85 diluted earnings per share for first quarter 2005. This compares to 2004's first quarter earnings of $119.3 million, or $.92 diluted earnings per share.
"This quarter represents a solid start to the year," said Chairman and CEO, Ken Glass. "The execution of our strategic initiatives resulted in improved operating performances over last quarter in all of our business segments in spite of a continued weak market environment."
Glass continued, "We are pleased by the momentum evident as we accelerate the execution of our strategy. In addition to Northern Virginia, we are now establishing First Horizon banks in Georgia and Texas. At the same time we continue to be recognized as one of the best places to work, which makes it possible to hire the best talent, supporting our growth."
Return on average shareholders' equity and return on average assets were 21.8 percent and 1.30 percent, respectively for first quarter 2005 compared to 25.6 percent and 1.93 percent for first quarter 2004. Total assets were $35.2 billion and shareholders' equity was $2.1 billion on March 31, 2005, compared to $27.1 billion and $1.9 billion, respectively, on March 31, 2004.
PERFORMANCE HIGHLIGHTS
RETAIL/COMMERCIAL BANKING
Pre-tax income for Retail/Commercial Banking increased 36 percent to $118.7 million for first quarter 2005, compared to $87.7 million for first quarter 2004. Retail/Commercial Banking contributed 73 percent of total pre-tax income in first quarter 2005 compared to 49 percent in first quarter 2004. Total revenues increased 16 percent to $319.3 million for first quarter 2005 compared to $274.1 million for first quarter 2004.
Net interest income increased 25 percent to $197.9 million in first quarter 2005 from $158.1 million in first quarter 2004. The increase in 2005's net interest income is primarily attributable to 19 percent loan growth which consisted of 26 percent or $1.6 billion growth in commercial loans and 14 percent or $1.1 billion growth in retail loans. This growth reflects FHN's national expansion strategies, which leverage cross-sell opportunities in markets where we have a substantial mortgage presence and expansion of the sales force. Loan growth was partially funded by an increase in core deposits of 11 percent. Retail/Commercial Banking's net interest margin for first quarter 2005 was stable compared to first quarter 2004, and the margin increased 5 basis points compared to fourth quarter 2004.
Noninterest income increased 5 percent in first quarter 2005 to $121.4 million compared to $116.0 million in first quarter 2004. The increase in noninterest income in first quarter 2005 included $10.4 million net gains from whole-loan sales of approximately $440 million of real estate residential loans. Included in first quarter 2004 are $5.0 million net gains from the securitization of approximately $300 million of real estate residential loans. Also impacting growth in noninterest income is a 22 percent increase in merchant processing income reflecting increased volume from existing customers as well as an expanded customer base.
The provision for loan losses decreased to $13.1 million in first quarter 2005 from $14.2 million last year primarily due to improvements in the risk profile of both the retail and commercial loan portfolios. The risk profile of the retail portfolio improved as the mix shifted to a greater concentration of high credit score products. The risk profile of the commercial loan portfolio improved as indicated by current lower levels of watch and classified loans.
Noninterest expense was $187.5 million in first quarter 2005 compared to $172.2 million last year. The growth in noninterest expense was due to higher personnel costs which were largely attributable to national expansion initiatives. As total revenue grew 16 percent and noninterest expense grew 9 percent, the efficiency ratio improved from 63 percent in first quarter 2004 to 59 percent in first quarter 2005. This improvement in the efficiency ratio was accomplished through FHN's ability to leverage current infrastructure while executing national expansion initiatives.
MORTGAGE BANKING
Pre-tax income for Mortgage Banking decreased 35 percent to $41.2 million for first quarter 2005, compared to $63.5 million for first quarter 2004. Total revenues were $155.5 million in first quarter 2005, a decrease of 5 percent from $163.2 million in first quarter 2004.
Noninterest income decreased 6 percent to $122.6 million in first quarter 2005 compared to $130.8 million in first quarter 2004. Noninterest income consists primarily of mortgage banking-related revenue, net of costs, from the origination and sale of mortgage loans, fees from mortgage servicing and mortgage servicing rights (MSR) net hedge gains or losses. Total noninterest income is net of amortization, impairment and other expenses related to MSR and related hedges.
Mortgage loan origination volumes in first quarter 2005 were $7.6 billion compared to $6.9 billion in 2004 driven by an increase in home purchase related originations, which grew 39 percent from first quarter 2004. This increase demonstrates FHN's success in executing its strategy to grow the purchase market and was the result of an expanded sales force which increased 19 percent to almost 2,000 relationship managers. Refinance activity represented 47 percent of total originations during first quarter 2005 compared to 58 percent last year. Loans delivered into the secondary market increased 20 percent to $7.4 billion. Net revenue from originating and selling mortgage loans (generally driven by origination volumes and loans securitized and sold) increased 4 percent to $100.0 million compared to $95.8 million in first quarter 2004.
The mortgage-servicing portfolio grew 25 percent to $88.0 billion on March 31, 2005, from $70.3 billion on March 31, 2004. Total fees associated with mortgage servicing increased 25 percent to $67.9 million reflecting this growth. In addition, the growth in the servicing portfolio and rising interest rates led to a 41 percent increase in capitalized mortgage servicing rights and a 38 percent, or $12.9 million, increase in amortization expense compared to first quarter 2004. In total, the $14.6 million decrease in net servicing revenues consists of these and several other factors, including a decrease of $13.8 million in MSR net hedge gains and a favorable $4.2 million impact from lower MSR impairment charges. In addition, mortgage trading securities valuations had a negative $6.0 million impact on net servicing revenue due to the flattening of the yield curve and the negative impact of decreased volatility in the derivative market.
Noninterest expense increased 15 percent in first quarter 2005 to $114.3 million compared to $99.7 million in first quarter 2004. In first quarter 2005, noninterest expense was unfavorably impacted primarily by increased personnel expense associated with growth in the sales force.
CAPITAL MARKETS
Pre-tax earnings declined from $30.8 million in first quarter 2004 to $9.3 million in first quarter 2005 primarily due to a reduction in fixed income securities sales, net of a related decline in commissions and incentives. Significant uncertainties within the investment community regarding interest rates and other economic factors have caused fixed income investors to delay their purchases. As a result of these impacts, revenues from fixed income sales to depository and non-depository investors fell $19.0 million. First quarter 2005 results include impacts from the acquisition of the fixed income business of Spear, Leeds and Kellogg (SLK) which created one-time transition costs of approximately $3 million from the cost of carrying additional trading inventory and other expenses. Due to the SLK acquisition, non-depository revenues exceeded depository revenues and represented 36 percent of noninterest income in first quarter 2005 compared to 27 percent in first quarter 2004. Revenues from other fee sources include fee income from activities such as investment banking, equity research, portfolio advisory and the sale of bank-owned life insurance. Revenue from other fee sources decreased 10 percent from $37.3 million first quarter 2004 to $33.4 million in first quarter 2005.
Net interest income decreased $6.1 million due to an incremental capital charge of $4.6 million associated with funding the increase in business activities related to the SLK acquisition, as well as, $3.0 million due to the cost of carrying additional trading inventory.
Noninterest expense decreased 8 percent or $7.5 million, primarily due to lower personnel expense, reflecting the decline in commissions and incentives. The decline in noninterest expense was partially offset by increased costs associated with the acquisition of SLK.
CORPORATE
The Corporate segment's results showed a pre-tax loss of $6.3 million in first quarter 2005, compared to a pre-tax loss of $2.1 million in first quarter 2004 primarily related to a decrease in net interest income from a shift in balance sheet positioning. In March 2005, First Tennessee Bank National Association issued 300,000 shares of noncumulative perpetual preferred stock which provided $295.4 million additional capital.
AVERAGE BALANCE SHEET
Total average assets increased 37 percent to $34.1 billion for first quarter 2005. Total loans increased 19 percent to $16.7 billion as retail loans increased 14 percent and commercial loans grew 26 percent. Loans held for sale increased 62 percent to $5.3 billion. Interest-bearing core deposits increased 13 percent to $6.7 billion. Total core deposits increased 12 percent reflecting expansion strategies which emphasize a focus on convenient hours, free checking and targeted financial center expansion. Purchased funds increased 64 percent to $16.3 billion. Average shareholders' equity increased 9 percent in first quarter 2005.
The consolidated net interest margin was 3.12 percent for first quarter 2005 compared to 3.68 percent for first quarter 2004. This compression in the margin occurred as the spread decreased to 2.80 percent in 2005 from 3.45 percent in 2004 while average earning assets increased 37 percent and net interest income increased only 16 percent. Capital markets activities tend to compress the margin because of its strategy to reduce market risk by hedging its inventory in the cash markets, which reduces the term and accordingly the interest income earned on these transactions. The SLK acquisition increased this negative pressure on the corporate margin in first quarter 2005 as the capital markets balance sheet grew $3.7 billion. In addition, the mortgage warehouse negatively impacted the margin this quarter as the spread decreased 102 basis points to 2.89 percent and the volume grew 28 percent from 2004.
ASSET QUALITY
Continuing last year's trend, FHN's key asset quality ratios improved in first quarter 2005. The net charge-off ratio was 17 basis points in first quarter 2005 compared to 34 basis points in first quarter 2004 as net charge-offs decreased to $7.1 million from $11.8 million. Net charge-offs were impacted in first quarter 2005 by improvement in both the consumer and commercial loan portfolios. The nonperforming assets ratio was 38 basis points in first quarter 2005 compared to 48 basis points last year with nonperforming assets of $75.1 million on March 31, 2005, compared to $77.5 million on March 31, 2004. Provision for loan losses was $13.1 million in first quarter 2005 compared to $14.2 million in first quarter 2004. An analytical model based on historical loss experience adjusted for current events, trends and economic conditions is used by management to determine the amount of provision to be recognized and to assess the adequacy of the loan loss allowance. (See the table on A-4 for an analysis of the allowance for loan losses and details on nonperforming assets and the table on A-5 for asset quality ratios).
OUTLOOK
"Given our first quarter performance, the continued execution of our strategies, and the prevailing outlook for the operating environment, we still expect to resume earnings per share growth in 2005," said Chief Financial Officer Marty Mosby.
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, competition, investor responses to these conditions, ability to execute business plans, geopolitical developments, 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 to reflect future events or developments.
OTHER INFORMATION
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 website at www.FHNC.com.
Management will also host a conference call at 9:00 a.m. Eastern Time Thursday, April 21, 2005, to review earnings and performance trends. Callers wishing to participate in the call may dial toll-free starting at 8:45 a.m. Eastern Time April 21, 2005, at 1-800-289-0569. The conference will be webcast live through the investor relations section of FHN's Web site. To access the webcast, visit http://www.shareholder.com/ftb/medialist.cfm. A replay of the call will be available from noon Eastern Time April 21, 2005, until midnight Wednesday, May 4, 2005, by calling (888)203-1112 or (719)457-0820 for international participants. The passcode is 1319451. The event will be archived and made available by 2:00 p.m. Eastern Time April 21, 2005, on FHN's Web site at www.FHNC.com. For four weeks from 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 provided herein, we will not provide any earnings guidance, directly or indirectly, express or implied.
GENERAL INFORMATION
ABOUT FIRST HORIZON
The 13,000 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, with one of the nation's top underwriters of
U.S. government agency securities
-- Mortgage Banking, with one of the nation's top 20 mortgage
originators and top 15 servicers, which earned a top-10 ranking
in customer satisfaction from J.D. Power and Associates
-- 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 again named one of the nation's 100 best corporate citizens by Business Ethics magazine. More information can be found at www.FHNC.com.
FIRST HORIZON NATIONAL CORPORATION
STATEMENTS OF INCOME
Yearly Growth
(Unaudited)
---------------------------------------------------------------------
Year-to-date
March 31
----------------------
Growth
(Thousands) 2005 2004 Rate (%)
---------------------------------------------------------------------
Interest income $ 384,876 $ 254,015 51.5 +
Less interest expense 157,429 58,006 171.4 +
---------------------------------------------------------------------
Net interest income 227,447 196,009 16.0 +
Provision for loan losses 13,109 14,229 7.9 --
---------------------------------------------------------------------
Net interest income after
provision for loan losses 214,338 181,780 17.9 +
Noninterest income:
Mortgage banking 118,408 126,566 6.4 --
Capital markets 95,162 117,928 19.3 --
Deposit transactions and
cash management 33,255 33,961 2.1 --
Merchant processing 20,460 16,743 22.2 +
Insurance commissions 14,749 16,394 10.0 --
Trust services and investment
management 11,164 11,804 5.4 --
Gains on divestitures -- 2,000 NM
Securities gains/(losses), net (66) 885 NM
Other 50,266 43,844 14.6 +
---------------------------------------------------------------------
Total noninterest income 343,398 370,125 7.2 --
---------------------------------------------------------------------
Adjusted gross income after
provision for loan losses 557,736 551,905 1.1 +
Noninterest expense:
Employee compensation, incentives
and benefits 242,986 238,250 2.0 +
Occupancy 24,516 20,963 16.9 +
Equipment rentals, depreciation,
and maintenance 18,085 17,776 1.7 +
Operations services 18,477 15,399 20.0 +
Communications and courier 12,893 11,803 9.2 +
Amortization of intangible assets 3,362 2,171 54.9 +
Other 74,536 65,614 13.6 +
---------------------------------------------------------------------
Total noninterest expense 394,855 371,976 6.2 +
---------------------------------------------------------------------
Pre-tax income 162,881 179,929 9.5 --
Provision for income taxes 53,672 60,658 11.5 --
---------------------------------------------------------------------
Net income $ 109,209 $ 119,271 8.4 --
========= =========
---------------------------------------------------------------------
Diluted earnings per
common share $ .85 $ .92 7.6 --
Dividends declared $ .43 $ .40
SELECTED FINANCIAL RATIOS:
--------------------------
Return on average assets 1.30% 1.93%
Return on average
shareholders' equity 21.8 25.6
---------------------------------------------------------------------
Certain previously reported amounts have been reclassified to agree
with current presentation.
A-1
FIRST HORIZON NATIONAL CORPORATION
AVERAGE STATEMENTS OF CONDITION
Yearly Growth
(Unaudited)
---------------------------------------------------------------------
Year-to-date
March 31
--------------------------
Growth
(Thousands) 2005 2004 Rate(%)
--------------------------------------------------------------------
Loans, net of unearned
income:
Commercial:
Commercial, financial
and industrial $ 5,480,107 $ 4,491,546 22.0 +
Real estate commercial 1,004,564 982,616 2.2 +
Real estate
construction 1,305,981 705,609 85.1 +
--------------------------------------------------------------------
Total commercial loans 7,790,652 6,179,771 26.1 +
Retail:
Real estate residential 7,385,847 6,810,550 8.4 +
Real estate
construction 1,105,392 550,504 100.8 +
Other retail 160,685 204,043 21.2 --
Credit card receivables 238,066 259,337 8.2 --
--------------------------------------------------------------------
Total retail loans 8,889,990 7,824,434 13.6 +
--------------------------------------------------------------------
Total loans, net of
unearned income 16,680,642 14,004,205 19.1 +
Investment securities 2,794,805 2,546,749 9.7 +
Loans held for sale 5,315,114 3,290,877 61.5 +
Other earning assets 4,576,607 1,577,685 190.1 +
--------------------------------------------------------------------
Total earning assets 29,367,168 21,419,516 37.1 +
Cash and due from banks 729,802 718,739 1.5 +
Other assets 3,994,471 2,755,755 45.0 +
--------------------------------------------------------------------
Total assets $34,091,441 $24,894,010 36.9 +
==========================
Certificates of deposit
under $100,000 and other
time $ 2,102,399 $ 1,824,562 15.2 +
Other interest-bearing
deposits 4,567,853 4,055,099 12.6 +
--------------------------------------------------------------------
Total interest-bearing
core deposits 6,670,252 5,879,661 13.4 +
Demand deposits 1,784,963 1,791,882 .4 --
Other noninterest-bearing
deposits 3,001,739 2,544,154 18.0 +
--------------------------------------------------------------------
Total core deposits 11,456,954 10,215,697 12.2 +
Certificates of deposit
$100,000 and more 10,147,069 5,856,287 73.3 +
--------------------------------------------------------------------
Total deposits 21,604,023 16,071,984 34.4 +
Short-term borrowed funds 6,152,695 4,058,391 51.6 +
Term borrowings 2,616,152 1,821,762 43.6 +
Other liabilities 1,653,219 1,069,770 54.5 +
Preferred stock of
subsidiary 29,998 450 NM
Shareholders' equity 2,035,354 1,871,653 8.7 +
--------------------------------------------------------------------
Total liabilities
and shareholders'
equity $34,091,441 $24,894,010 36.9 +
===========================
--------------------------------------------------------------------
Certain previously reported amounts have been reclassified to agree
with current presentation.
A-2
FIRST HORIZON NATIONAL CORPORATION
PERIOD-END STATEMENTS OF CONDITION
(Unaudited)
-------------------------------------------------------------------
Year-to-Date
March 31
---------------------------
Growth
(Thousands) 2005 2004 Rate (%)
-------------------------------------------------------------------
Loans, net of unearned
income:
Commercial:
Commercial, financial
and industrial $ 5,781,348 $ 4,638,980 24.6 +
Real estate commercial 1,030,052 999,831 3.0 +
Real estate construction 1,427,955 701,574 103.5 +
-------------------------------------------------------------------
Total commercial loans 8,239,355 6,340,385 30.0 +
Retail:
Real estate residential 7,358,940 6,832,121 7.7 +
Real estate construction 1,190,155 591,941 101.1 +
Other retail 160,457 195,478 17.9 --
Credit card receivables 234,915 252,195 6.9 --
-------------------------------------------------------------------
Total retail loans 8,944,467 7,871,735 13.6 +
-------------------------------------------------------------------
Total loans, net of
unearned income 17,183,822 14,212,120 20.9 +
Investment securities 2,899,916 2,485,592 16.7 +
Loans held for sale 5,277,158 4,323,269 22.1 +
Other earning assets 3,436,321 1,368,395 151.1 +
-------------------------------------------------------------------
Total earning assets 28,797,217 22,389,376 28.6 +
Cash and due from banks 773,415 859,091 10.0 --
Other assets 5,586,791 3,835,701 45.7 +
-------------------------------------------------------------------
Total assets $35,157,423 $27,084,168 29.8 +
==========================
Certificates of deposit
under $100,000 and other
time $ 2,145,312 $ 1,828,565 17.3 +
Other interest-bearing
deposits 4,637,474 4,123,460 12.5 +
-------------------------------------------------------------------
Total interest-bearing
core deposits 6,782,786 5,952,025 14.0 +
Demand deposits 2,473,179 2,525,380 2.1 --
Other noninterest-bearing
deposits 3,035,455 2,777,088 9.3 +
-------------------------------------------------------------------
Total core deposits 12,291,420 11,254,493 9.2 +
Certificates of deposit
$100,000 and more 10,781,020 6,889,186 56.5 +
-------------------------------------------------------------------
Total deposits 23,072,440 18,143,679 27.2 +
Short-term borrowed funds 4,679,886 2,436,270 92.1 +
Term borrowings 2,591,354 2,345,409 10.5 +
Other liabilities 2,425,171 2,239,466 8.3 +
Preferred stock of
subsidiary 295,858 448 NM
Shareholders' equity 2,092,714 1,918,896 9.1 +
-------------------------------------------------------------------
Total liabilities and
shareholders' equity $35,157,423 $27,084,168 29.8 +
==========================
-------------------------------------------------------------------
Certain previously reported amounts have been reclassified to agree
with current presentation.
A-3
FIRST HORIZON NATIONAL CORPORATION
ASSET QUALITY HIGHLIGHTS
(Unaudited)
--------------------------------------------------------------------
(Thousands) 1Q05 4Q04 3Q04 2Q04 1Q04
--------------------------------------------------------------------
ALLOWANCE FOR LOAN
LOSSES:
Beginning
Reserve $158,159 $161,856 $160,757 $160,685 $160,333
Provision 13,109 11,783 10,044 12,292 14,229
Transfers to
held for sale -- (4,705) (351) (1,239) (2,087)
Charge-offs (11,022) (13,742) (12,497) (14,305) (16,085)
Recoveries 3,949 2,967 3,903 3,324 4,295
--------------------------------------------------------------------
Ending Balance $164,195 $158,159 $161,856 $160,757 $160,685
-------------------=================================================
Reserve for
off-balance sheet
commitments $ 8,212 $ 7,904 $ 8,259 $ 7,883 $ 7,001
Total of allowance
for loan losses
and reserve for
off-balance
sheet commitments $172,407 $166,063 $170,115 $168,640 $167,686
--------------------------------------------------------------------
NONPERFORMING ASSETS:
RETAIL/COMMERCIAL
BANKING:
Nonperforming
loans $ 40,160 $ 41,102 $ 45,633 $ 45,671 $ 38,243
Foreclosed real
estate 22,239 24,092 27,428 28,833 25,355
Other assets -- -- -- -- 336
--------------------------------------------------------------------
Total Retail/
Commercial Banking 62,399 65,194 73,061 74,504 63,934
--------------------------------------------------------------------
MORTGAGE BANKING:
Nonperforming
loans - held for
sale 9,264 8,458 7,279 11,118 9,003
Foreclosed real
estate 3,456 3,686 5,044 4,417 4,523
--------------------------------------------------------------------
Total Mortgage
Banking 12,720 12,144 12,323 15,535 13,526
--------------------------------------------------------------------
Total nonper-
forming assets $ 75,119 $ 77,338 $ 85,384 $ 90,039 $ 77,460
=================================================
Loans past due 90
days or more $206,424 $213,596 $212,216 $202,167 $220,019
Guaranteed portion
of loans past due
90 days or more 181,666 185,353 188,213 182,410 194,553
Period-end loans,
net of unearned
(millions) $ 17,184 $ 16,428 $ 16,403 $ 15,301 $ 14,212
Insured loans 801 666 560 620 632
--------------------------------------------------------------------
Loans excluding
insured loans $ 16,383 $ 15,762 $ 15,843 $ 14,681 $ 13,580
=================================================
Off-balance sheet
commitments
(millions)(a) $ 6,465 $ 6,226 $ 5,848 $ 5,607 $ 5,294
--------------------------------------------------------------------
(a) Amount of off-balance sheet commitments for which a reserve has
been provided.
Certain previously reported amounts have been reclassified to agree
with current presentation.
A-4
FIRST HORIZON NATIONAL CORPORATION
ASSET QUALITY HIGHLIGHTS
(Unaudited)
--------------------------------------------------------------------
(Thousands) 1Q05 4Q04 3Q04 2Q04 1Q04
--------------------------------------------------------------------
FHN CONSOLIDATED:
Nonperforming loans
ratio (a) .23% .25% .28% .30% .27%
Nonperforming assets
ratio (b) .38 .42 .48 .51 .48
Allowance to total
loans .96 .96 .99 1.05 1.13
Allowance to loans
excluding insured
loans 1.00 1.00 1.02 1.10 1.18
Allowance to
nonperforming
loans (c) 408.85 384.80 354.69 351.99 420.17
Allowance to
nonperforming
assets (d) 249.33 229.62 207.23 203.69 234.72
Net charge-off
ratio (e) .17 .26 .22 .30 .34
RETAIL/COMMERCIAL BANKING:
Nonperforming assets
ratio (b) .36% .40% .44% .49% .45%
Allowance to
nonperforming
assets 263.14 242.60 221.54 215.77 251.33
MORTGAGE BANKING:
Nonperforming assets
ratio (f) .01% .01% .02% .02% .02%
--------------------------------------------------------------------
(a) Ratio is nonperforming loans in the loan portfolio to total
loans
(b) Ratio is nonperforming assets related to the loan portfolio to
total loans plus foreclosed real estate and other assets
(c) Ratio is allowance to nonperforming loans in the loan portfolio
(d) Ratio is allowance to nonperforming assets related to the loan
portfolio
(e) Ratio is annualized net charge-offs to average total loans
(f) Ratio is nonperforming assets to unpaid principal balance of
servicing portfolio
A-5
FIRST HORIZON NATIONAL CORPORATION
BUSINESS SEGMENT HIGHLIGHTS
(Unaudited)
--------------------------------------------------------------------
(Thousands) 1Q05 4Q04 3Q04 2Q04 1Q04
--------------------------------------------------------------------
RETAIL/COMMERCIAL
BANKING
Total Revenues $319,302 $324,551 $294,960 $288,841 $274,084
Loan Loss Provision 13,069 11,798 10,044 12,310 14,249
Noninterest
Expenses 187,505 191,551 180,250 177,235 172,224
------------------------------------------------
Pre-Tax Income $118,728 $121,202 $104,666 $ 99,296 $ 87,611
Taxes 38,296 36,559 33,665 25,990 27,219
------------------------------------------------
Net Income $ 80,432 $ 84,643 $ 71,001 $ 73,306 $ 60,392
MORTGAGE BANKING
Total Revenues $155,525 $140,708 $146,984 $167,409 $163,242
Loan Loss Provision 40 (15) -- (18) (20)
Noninterest
Expenses 114,305 110,736 109,255 118,711 99,664
------------------------------------------------
Pre-Tax Income $ 41,180 $ 29,987 $ 37,729 $ 48,716 $ 63,598
Taxes 14,735 10,748 13,716 17,766 23,368
------------------------------------------------
Net Income $ 26,445 $ 19,239 $ 24,013 $ 30,950 $ 40,230
CAPITAL MARKETS
Total Revenues $ 90,607 $ 79,959 $ 81,562 $103,004 $119,564
Noninterest
Expenses 81,307 69,527 64,640 77,945 88,806
------------------------------------------------
Pre-Tax Income $ 9,300 $ 10,432 $ 16,922 $ 25,059 $ 30,758
Taxes 4,016 3,373 6,293 9,455 11,776
------------------------------------------------
Net Income $ 5,284 $ 7,059 $ 10,629 $ 15,604 $ 18,982
CORPORATE
Total Revenues $ 5,411 $ (3,624) $ 22,358 $ 6,651 $ 9,244
Noninterest
Expenses 11,738 10,874 11,451 10,189 11,282
------------------------------------------------
Pre-Tax Income $ (6,327) $(14,498) $ 10,907 $ (3,538) $ (2,038)
Taxes (3,375) (6,709) 2,949 (2,062) (1,705)
------------------------------------------------
Net Income $ (2,952) $ (7,789) $ 7,958 $ (1,476) $ (333)
TOTAL
CONSOLIDATED
Total Revenues $570,845 $541,594 $545,864 $565,905 $566,134
Loan Loss
Provision 13,109 11,783 10,044 12,292 14,229
Total Noninterest
Expenses 394,855 382,688 365,596 384,080 371,976
------------------------------------------------
Consolidated
Pre-Tax Income $162,881 $147,123 $170,224 $169,533 $179,929
Taxes 53,672 43,971 56,623 51,149 60,658
------------------------------------------------
Net Income $109,209 $103,152 $113,601 $118,384 $119,271
=================================================
A-6