First Horizon(US:FHN)2020-11-05 22:12Financial Performance - Net income available to common shareholders for Q3 2020 was $523.3 million, or $0.95 per diluted share, compared to $109.5 million, or $0.35 per diluted share in Q3 2019[448]. - For the nine months ended September 30, 2020, net income available to common shareholders was $587.7 million, or $1.50 per diluted share, compared to $317.9 million, or $1.00 per diluted share for the same period in 2019[454]. - Total revenue increased 95% to $756.4 million in the third quarter of 2020 from $388.4 million in the third quarter of 2019[468]. - Total revenue for the nine months ended September 30, 2020, was $1.6 billion, compared to $1.4 billion for the same period in 2019[507]. - Net income for the period was $612.2 million, with an increase in AOCI of $99.1 million[561]. Mergers and Acquisitions - The IBKC merger, valued at $2.5 billion, was completed on July 1, 2020, resulting in a purchase accounting gain of $532.2 million[447]. - First Horizon Bank acquired 30 branches from Truist Bank on July 17, 2020, assuming approximately $2.2 billion in branch deposits[447]. - The company issued $2.5 billion in equity related to the IBKC merger, contributing to the capital increase[561]. Income and Expenses - Net interest income increased by 77% to $532.4 million in Q3 2020, primarily due to the IBKC merger and Truist branch acquisition[449]. - Noninterest income rose by $651.2 million to $822.9 million in Q3 2020, driven by a $532.2 million preliminary purchase accounting gain from the IBKC merger[451]. - Noninterest expense increased by 90% to $587.0 million in Q3 2020, which included $116 million in merger-related costs[452]. - Noninterest expense increased 34% to $768.9 million for the nine months ended September 30, 2020, primarily due to the inclusion of IBKC[473]. - Personnel expense increased to $329.4 million in Q3 2020, up 97% from $167.0 million in Q3 2019, driven by higher headcount from the IBKC merger[522]. Credit Losses and Provisions - Provision for credit losses totaled $227.0 million in Q3 2020, up from $14.4 million in Q3 2019, largely due to non-PCD loans from the IBKC merger and the impact of COVID-19[450]. - Provision for credit losses was $502.4 million for the nine months ended September 30, 2020, a significant increase from $36.3 million in the same period of 2019[456]. - The provision for loan losses was $51.8 million for the quarter, reflecting the impact of the COVID-19 pandemic[596]. - The total allowance for loan and lease losses (ALLL) increased to $988.1 million as of September 30, 2020, from $200.3 million on December 31, 2019[616]. Asset and Liability Management - Average assets increased to $57.8 billion for the nine months ended September 30, 2020, up from $41.4 billion in the same period of 2019[458]. - Period-end assets increased to $83.0 billion, up from $43.3 billion at December 31, 2019, primarily due to the IBKC merger and Truist branch acquisition[539]. - Period-end loans and leases rose by $28.6 billion, or 92%, to $59.7 billion as of September 30, 2020, driven by $26.3 billion in acquired loans and PPP lending[542]. - Period-end deposits increased to $68.4 billion on September 30, 2020, from $32.4 billion at December 31, 2019, largely due to the IBKC merger and Truist branch acquisition[551]. Capital Ratios and Equity - Common equity tier 1 ratio was 9.21% at September 30, 2020, compared to 9.20% at December 31, 2019[563]. - Total regulatory capital reached $7.77 billion as of September 30, 2020, up from $4.15 billion at December 31, 2019[563]. - Period-end equity increased to $8.1 billion as of September 30, 2020, up $3.1 billion from December 31, 2019[561]. - FHN's Tier 1 capital ratio improved to 10.25% as of September 30, 2020, from 10.15% at December 31, 2019[563]. Loan Quality and Performance - The nonperforming loan (NPL) ratio increased to 0.63% of C&I loans as of September 30, 2020, up from 0.37% as of December 31, 2019[587]. - Nonperforming loans increased by $94.4 million to $180.1 million as of September 30, 2020, with the NPL ratio rising to 1.46%[609]. - The allowance for loan and lease losses increased to $265.4 million as of September 30, 2020, up from $28.4 million at year-end 2019, representing an increase of 169 basis points to 2.15% of loans[609]. - The C&I allowance for loan and lease losses (ALLL) increased by $366.6 million to $489.1 million as of September 30, 2020, primarily due to economic uncertainty from the COVID-19 pandemic[584]. Economic Impact and Outlook - The company continues to monitor the impact of the COVID-19 pandemic on its operations and financial markets[435]. - Economic uncertainty due to the COVID-19 pandemic may impact future trends in the consumer real estate portfolio[602]. - The current expectation of losses from potential problem assets has been included in management's analysis for assessing the adequacy of the allowance for loan and lease losses[631].