First Horizon National Corp.
) reported fourth-quarter 2013 earnings per share of 21 cents,
which came ahead of the Zacks Consensus Estimate as well as the
year-ago figure of 17 cents.
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For 2013, the company reported earnings per share of 10 cents
compared to a loss of 11 cents in the prior year. Further, the
reported figure beat the Zacks Consensus Estimate of 6 cents.
However, the earnings beat did little to gain investors'
confidence as the stock slipped around 2% in the pre-trading
session. A stagnation in the top line growth due to low rates and
weak consumer confidence is the main concern.
First Horizon's results reflected lower-than-anticipated expenses
on the back of prudent expense management. However,
lower-than-expected revenues were a concern.
Net income available to common shareholders was $49.1 million, up
21% from the prior-year quarter. For 2013, net income was $23.5
million versus loss of $27.8 million in the prior year.
Quarter in Detail
Total revenue came in at $292.2 million, lagging the Zacks
Consensus Estimate of $299.0 million. Moreover, revenues fell 8%
from the year-ago quarter.
For 2013, total revenue was $1.2 billion, down 10% year over year
but in line with the Zacks Consensus Estimate.
On a fully taxable equivalent basis, net interest income declined
8% year over year to $159.2 million. Net interest margin
decreased 11 basis points (bps) year over year to 2.98%.
Non-interest income slipped 12% from the prior-year quarter to
Non-interest expense declined 4% from the prior-year quarter to
Period-end loans declined 8% year over year to $15.4 billion.
However, total deposits rose 1% to $16.7 billion as compared with
the prior-year quarter.
First Horizon's credit quality metrics was a mixed bag in the
reported quarter. Allowance for loan losses were down 8% year
over year to $253.8 million. As a percentage of period-end loans
on an annualized basis, allowance for loan losses was 1.65%, down
1 basis point year over year.
Further, the company's provision for loan losses remained stable
year over year at $15 million. Net charge-offs fell 15% on a
year-over-year basis to $16.9 million. As a percentage of average
loans and on an annualized basis, net charge-offs were 0.44%,
down from 0.48% reported in the year-ago quarter.
However, nonperforming assets rose 4% year over year to $435.0
million. As a percentage of period-end loans plus foreclosed real
estate and other assets, nonperforming assets came in at 1.95%,
up 11 basis points year over year.
Evaluation of Capital
First Horizon's capital ratios remained at strong levels.
Adjusted tangible common equity ratio to risk weighted assets was
10.31% versus 9.93% as of Dec 31, 2012. Moreover, book value per
share came in at $8.92, compared with $9.09 in the prior-year
First Horizon's endeavors to lower its exposure to problem loans
are impressive. It also aims to control costs and improve
long-term profitability by focusing on strengthening its core
Tennessee banking franchise. Moreover, share buybacks and the
repurchase obligation settlement augur well going forward.
However, though winding down of the non-strategic part of First
Horizon's loan portfolio bodes well, it will remain a drag on the
company earnings going forward. In addition to a shrinking
revenue base, regulatory issues, a tepid economic recovery and
low interest rate environment will challenge its performance.
Currently, First Horizon carries a Zacks Rank #3 (Hold). Among
other Southeast banks,
) is expected to announce third-quarter results on Jan 28, while
Customers Bancorp, Inc.
) are slated to release earnings on Jan 22 and Jan 23,