First Horizon National Corp. (NYSE:FHN) today announced its first quarter 2020 financial results. The company’s loans to mortgage companies and fixed income businesses were key contributors for the first quarter. Reported earnings per share (EPS) were $0.04, reflecting a significant increase in provision expense. First Horizon recorded provision for loan losses of $145 million, an increase of $135 million from 4Q19, primarily driven by a sudden, steep decline in the economic forecast in the later part of the quarter following widespread societal responses to the COVID-19 pandemic. Effective January 1, 2020, First Horizon adopted Accounting Standards Update (ASU) 2016-13 (CECL).
“The COVID-19 pandemic has created unprecedented challenges for our nation, our communities and companies of all sizes. We believe our dedicated employees, diverse businesses, balance sheet capacity and ample liquidity have helped position First Horizon to help our clients and communities navigate through this difficult time,” said Bryan Jordan, chairman and CEO of First Horizon. “Since the beginning of the crisis, we have taken significant steps to help our employees remain safe while continuing to serve our customers and our communities. We processed over $1.6 billion in loans to assist small business customers through the Small Business Administration Payroll Protection Program. In addition, our First Horizon Foundation donated $2.5 million in support of COVID-19 emergency relief efforts to nonprofit organizations to provide meal, educational and emergency assistance to support our communities.”
Jordan continued, “Our first quarter results reflected our balanced and diversified business mix, stable credit quality metrics and capital, and our ability to use our balance sheet to support customers. Looking ahead, our merger with IBERIABANK Corporation remains on track and is expected to close in the second quarter. We have been working diligently on the integration plan to bring the two organizations together. As a combined company, we will be well positioned as a leading southern financial services firm.”
Highlights for the quarter include:
= Balance sheet growth driven by loans to mortgage companies and higher utilization rates
= Unique business mix provides earnings contribution in challenging environment
= Pre-provision net revenueup 19% YOY driven by growth in countercyclical businesses and continued expense discipline
= Average loans flat LQ, up 12% YOY
= Average deposits flat LQ, up 1% YOY
= Fixed income average daily revenue of $1.3 million, an increase of 19% LQ and 73% YOY with growth across multiple trading desks and across customer base
LQ – Linked Quarter (compared to 4Q19), YOY – Year Over Year (compared to 1Q19).
Pre-provision net revenue is not a GAAP number but is used in regulatory stress test reporting. The presentation of PPNR in this Earnings Release follows the regulatory definition.