First Horizon National Corp., parent firm of First Tennessee Bank, said it generated earnings per share of $0.19 in the third quarter by growing loans and net interest income, maintaining net interest margins and strong asset quality, controlling costs and extracting value as the company winds down its non-strategic businesses.
Average loans in the regional bank, First Tennessee, were up 4 percent from second quarter. Fixed income revenue in the FTN Financial capital markets group increased to $41.2 million in the third quarter from $40.5 million in the second quarter.
"I am proud of the hard work and progress our people are making on behalf of our customers and our business. We are making strategic decisions based on our economic profit models and our bonefish metrics that will lead to greater profitability for the long term," said Bryan Jordan, First Horizon's chairman and CEO. "We will continue to invest where we create value for our customers and maintain a culture to attract and keep the best people in the business."
Financial highlights
- Net income available to common shareholders was $45 million, or $0.19 per diluted share, in the third quarter. Second quarter's EPS of $0.32 was significantly increased by the recovery of litigation costs.
- The regional bank was particularly strong in the third quarter, with pre-tax income up 9 percent from second quarter. The bankers at First Tennessee grew commercial loans, and they continued to earn business in the bank's specialty lending segments and growth markets of Middle Tennessee, Houston and the Mid-Atlantic region that includes the Carolinas, Virginia and North Florida.
- In capital markets, pre-tax income was $5 million in the third quarter compared to $50 million in the second quarter, which included a $47 million expense reversal. Average daily revenues remained steady at FTN Financial, a significant contributor of fee income and an important part of First Horizon's business mix.
- Asset quality remained strong, with net charge-offs down 32 percent and non-performing assets down 36 percent year over year. Capital levels remained strong, too, with Tier 1 capital at 14.37 percent. In the third quarter First Horizon bought back two million common shares for $24 million, leaving $76 million available for repurchases in its current authorization. Since 2011 the company has bought more than 11 percent of outstanding shares at a good return.
- First Horizon continued to extract value from its non-strategic portfolio. Loan sales in the third quarter generated a $40 million pre-tax gain, which follows a second-quarter $8 million pre-tax gain from adjustments to the value of loans held for sale. The third-quarter gain was offset by a $35 million net pre-tax loss accrual related to litigation. First Horizon sold its mortgage business in 2008, and non-strategic loans now make up less than 18 percent of the total loan portfolio.