Shares of First Horizon National Corporation (FHN - Free Report) have gained nearly 7% post second-quarter 2019 earnings release. The company reported adjusted earnings per share of 42 cents which surpassed the Zacks Consensus Estimate of 37 cents. Further, the bottom line was 17% higher than the year-ago figure.
Results reflect First Horizon’s top-line strength and lower expenses. In addition, efficiency ratio contracted during the quarter, indicating increased profitability. However, lower net interest income, rise in net charge-offs and provision for loan losses were the key undermining factors.
After considering certain non-recurring items, net income available to common shareholders came in at $109.3 million, up 34% than the prior-year quarter.
Segment wise, quarterly net income for the regional banking segment declined 3% year over year to $128.3 million. However, Fixed income and non-strategic segments reported net income of $12.2 million and $13.2 million, respectively, — an improvement from the year-ago quarter. The corporate segment incurred net loss of $40 million.
Revenues Climb, Costs Down
Total revenues for the second quarter came in at $461.6 million, up 5% on a year-over-year basis. Also, the top line surpassed the Zacks Consensus Estimate of $442.3 million.
Net interest income for the reported quarter dipped 2% year over year to $303.6 million. Net interest margin shrunk 19 basis points (bps) to 3.34%. However, non-interest income came in at $158 million, up 24%.
Non-interest expenses slipped 10% year over year to $300.4 million.
Efficiency ratio came in at 65.08% compared with 75.90% witnessed in the year-ago quarter. It should be noted that a fall in the efficiency ratio indicates increase in profitability.
Total period-end loans, net of unearned income, came in at $29.7 billion, up 6% from the previous quarter. However, total period-end deposits were $32.3 billion, down marginally from first-quarter 2019.
Credit Quality Worsens
Allowance for loan losses was up 4% year over year to $192.7 million. However, as a percentage of period-end loans on an annualized basis, allowance for loan losses was 0.65%, down 2 bps year over year.
Nonetheless, the quarter witnessed net charge-offs of $5.2 million compared with $1.7 million reported in the prior-year quarter. In addition, non-performing assets increased 44% to $225.7 million. Also, during the quarter, the company recorded $13 million in provision for loan losses against no provisions in the year-ago quarter.
Capital Position
Tier 1 common equity ratio was 9.25%, up from 8.98% at the end of the year-earlier quarter. Additionally, total capital ratio was 11.34%, up from 11.25%.
Our Viewpoint
Continued growth in loans will likely be conducive to First Horizon’s top-line performance. This apart, improvement in the efficiency ratio is anticipated to support its profitability. Nevertheless, rising provision for loan losses remains a drag.
First Horizon National Corporation Price, Consensus and EPS Surprise
First Horizon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
First Republic Bank’s second-quarter 2019 earnings per share of $1.24 lagged the Zacks Consensus Estimate of $1.26. Nevertheless, the bottom line improved 3.3% from the year-ago quarter.
Citigroup (C - Free Report) delivered a positive earnings surprise of 2.8% in second-quarter 2019, backed by expense control. Adjusted earnings per share of $1.83 for the quarter handily outpaced the Zacks Consensus Estimate of $1.78. Also, earnings climbed 12% year over year.
Modest loan growth and higher mortgage banking fees drove JPMorgan’s (JPM - Free Report) second-quarter 2019 adjusted earnings of $2.59 per share, which outpaced the Zacks Consensus Estimate of $2.50. Results exclude income tax benefits of $768 million or 23 cents per share. Including this, earnings were $2.82 per share.
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Shares of First Horizon National Corporation (FHN - Free Report) have gained nearly 7% post second-quarter 2019 earnings release. The company reported adjusted earnings per share of 42 cents which surpassed the Zacks Consensus Estimate of 37 cents. Further, the bottom line was 17% higher than the year-ago figure.
Results reflect First Horizon’s top-line strength and lower expenses. In addition, efficiency ratio contracted during the quarter, indicating increased profitability. However, lower net interest income, rise in net charge-offs and provision for loan losses were the key undermining factors.
After considering certain non-recurring items, net income available to common shareholders came in at $109.3 million, up 34% than the prior-year quarter.
Segment wise, quarterly net income for the regional banking segment declined 3% year over year to $128.3 million. However, Fixed income and non-strategic segments reported net income of $12.2 million and $13.2 million, respectively, — an improvement from the year-ago quarter. The corporate segment incurred net loss of $40 million.
Revenues Climb, Costs Down
Total revenues for the second quarter came in at $461.6 million, up 5% on a year-over-year basis. Also, the top line surpassed the Zacks Consensus Estimate of $442.3 million.
Net interest income for the reported quarter dipped 2% year over year to $303.6 million. Net interest margin shrunk 19 basis points (bps) to 3.34%. However, non-interest income came in at $158 million, up 24%.
Non-interest expenses slipped 10% year over year to $300.4 million.
Efficiency ratio came in at 65.08% compared with 75.90% witnessed in the year-ago quarter. It should be noted that a fall in the efficiency ratio indicates increase in profitability.
Total period-end loans, net of unearned income, came in at $29.7 billion, up 6% from the previous quarter. However, total period-end deposits were $32.3 billion, down marginally from first-quarter 2019.
Credit Quality Worsens
Allowance for loan losses was up 4% year over year to $192.7 million. However, as a percentage of period-end loans on an annualized basis, allowance for loan losses was 0.65%, down 2 bps year over year.
Nonetheless, the quarter witnessed net charge-offs of $5.2 million compared with $1.7 million reported in the prior-year quarter. In addition, non-performing assets increased 44% to $225.7 million. Also, during the quarter, the company recorded $13 million in provision for loan losses against no provisions in the year-ago quarter.
Capital Position
Tier 1 common equity ratio was 9.25%, up from 8.98% at the end of the year-earlier quarter. Additionally, total capital ratio was 11.34%, up from 11.25%.
Our Viewpoint
Continued growth in loans will likely be conducive to First Horizon’s top-line performance. This apart, improvement in the efficiency ratio is anticipated to support its profitability. Nevertheless, rising provision for loan losses remains a drag.
First Horizon National Corporation Price, Consensus and EPS Surprise
First Horizon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
First Republic Bank’s second-quarter 2019 earnings per share of $1.24 lagged the Zacks Consensus Estimate of $1.26. Nevertheless, the bottom line improved 3.3% from the year-ago quarter.
Citigroup (C - Free Report) delivered a positive earnings surprise of 2.8% in second-quarter 2019, backed by expense control. Adjusted earnings per share of $1.83 for the quarter handily outpaced the Zacks Consensus Estimate of $1.78. Also, earnings climbed 12% year over year.
Modest loan growth and higher mortgage banking fees drove JPMorgan’s (JPM - Free Report) second-quarter 2019 adjusted earnings of $2.59 per share, which outpaced the Zacks Consensus Estimate of $2.50. Results exclude income tax benefits of $768 million or 23 cents per share. Including this, earnings were $2.82 per share.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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