First Tennessee Reports Record Earnings.MEMPHIS Memphis, city, ancient Egypt Memphis (mĕm`fĭs), ancient city of Egypt, capital of the Old Kingdom (c.3100–c.2258 B.C.), at the apex of the Nile delta and 12 mi (18 km) from Cairo. , Tenn.--(BUSINESS WIRE)--Oct. 14, 1999-- First Tennessee This article or section has multiple issues: * Its neutrality is disputed. * It reads like an advertisement and needs to be rewritten in a neutral point of view. * It may require general cleanup to meet Wikipedia's quality standards. National Corporation (First Tennessee) (NYSE NYSE See: New York Stock Exchange :FTN FTN Face the Nation (CBS News) FTN Family Television Network FTN Fido Technology Networks FTN FeedThe.Net (website) FTN Franja Transversal del Norte (Guatemala region) ) announced today that it had achieved record earnings of $69.4 million for the third quarter of 1999, up 12 percent over last year's third quarter earnings of $61.8 million. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $.52 for the third quarter of 1999, growing 11 percent over the third quarter of 1998. Return on average shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. was 22.6 percent for the third quarter of 1999, and return on average assets was 1.48 percent. For the first nine months of 1999, net income totaled $183.4 million, or $1.37 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $160.9 million, or $1.22 per diluted share, for the first nine months of 1998. This represented a 14 percent growth rate for net income and a 12 percent growth rate for diluted earnings per share over the same period in 1998. Return on average shareholders' equity for the first nine months of 1999 was 20.9 percent and return on average assets was 1.32 percent, compared with 22.1 percent and 1.35 percent, respectively, in 1998. "I continue to be proud of the achievements of our employees," said Ralph Horn, chairman and chief executive officer of First Tennessee. "In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite a changing interest rate environment that slowed growth in capital markets and FT Mortgage, First Tennesseeans posted another strong quarter. In addition to these results, we were recently recognized as one of Working Mother magazine's top 10 employers and CIO CIO: see American Federation of Labor and Congress of Industrial Organizations. (Chief Information Officer) The executive officer in charge of information processing in an organization. magazine named us one of the top 100 technology companies in the nation." Comparisons of third quarter 1999 to third quarter 1998 -- Total revenues grew 7 percent from the third quarter of 1998. Fee income contributed approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 66 percent to total revenues for the third quarter of 1999 compared with 67 percent for the third quarter of 1998. -- Return on average assets (ROA ROA See: Return on assets ROA See: Right of accumulation ROA See return on assets (ROA). ) was 1.48 percent in the third quarter of 1999 compared with an ROA of 1.45 percent in the third quarter of 1998. -- Return on average shareholders' equity (ROE A fictitious surname used for an unknown or anonymous person or for a hypothetical person in an illustration. A lawsuit is generally named for the persons who are parties to it. ) was 22.6 percent for the third quarter of 1999, compared with 24.4 percent for the third quarter of 1998. The decline in this ratio was primarily caused by strong internal equity generation and retention. -- Total assets were $19.1 billion, shareholders' equity was $1.2 billion and market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. was $3.7 billion at September September: see month. 30, 1999. At September 30, 1998, total assets were $17.2 billion, shareholders' equity was $1.1 billion and market capitalization was $3.5 billion. Comparisons of the nine-month periods for 1999 and 1998 -- Total year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. revenues grew 22 percent over the previous year. Fee income contributed approximately 66 percent to total revenues, up from 63 percent in 1998. -- For the first nine months of 1999, ROA was 1.32 percent compared with 1.35 percent in 1998. -- ROE was 20.9 percent for the first nine months of 1999, declining from 22.1 percent for the same period in 1998 primarily from earnings retention. Noninterest Income Fee income (noninterest income excluding securities gains and losses) was $284.5 million for the third quarter of 1999, up 6 percent from the $267.9 million earned in the third quarter of 1998. This growth rate was positively impacted by the acquisition of several processing units of National Processing Co. (NPC 1. (complexity) NPC - NP-complete. 2. (architecture) NPC - Next Program Counter. ). Excluding this acquisition, total fee income growth would have been 3 percent. The changes in fee income are discussed below by line item. For the first nine months of 1999, noninterest income increased 28 percent over the same period in 1998. Excluding NPC, growth for this nine-month period would have been 26 percent. Mortgage Banking Fee income in mortgage banking, First Tennessee's largest contributing business line to noninterest income, decreased 1 percent to $158.9 million from $160.1 million in the third quarter of 1998. Overall loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. volume, consisting of both home purchase-related mortgages and refinances, declined 22 percent as interest rates continued to increase from the year-earlier period. During the third quarter of 1999, $4.4 billion was originated compared with originations of $5.6 billion in the third quarter of 1998. Refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. activity was down 69 percent; however, home purchase-related mortgages were up 21 percent. The servicing portfolio grew 38 percent to $48.7 billion at September 30, 1999, from $35.3 billion at September 30, 1998. Fees from the mortgage origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real process (origination fees A charge imposed by a lending institution or a bank for the service of processing a loan. For example, a bank might charge an individual who has applied for a student loan an origination fee of one percent for processing the application and granting the loan. and secondary marketing activities) were relatively unchanged from the third quarter of 1998. Although total origination volume decreased 22 percent, origination fees decreased only 5 percent from the third quarter of 1998, since the majority of the decline in volume was from refinances originated by wholesale brokers where less fees are earned by FT Mortgage. Total income from secondary marketing activities (recognition of mortgage servicing Mortgage servicing The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan. rights (MSRs) and hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. and other loan sale activities) increased approximately 5 percent from the third quarter of 1998. Net gains from hedging and other loan sale activities offset a decline in income recognized from MSRs retained. The decline in MSR MSR Microsoft Research MSR Montserrat (ISO Country code) MSR Mountain Safety Research (outdoor goods manufacturer) MSR Magnetic Stripe Reader MSR Egyptair (ICAO code) recognition was consistent with the decrease in origination volume. As rising interest rates led to the decline in origination volume it also led to a decline in prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. and the resulting growth in the servicing portfolio. From the third quarter of 1998, mortgage servicing fees increased 41 percent. A decrease in mortgage miscellaneous income of approximately $15 million was primarily due to gains from the sale of servicing hedges recognized in the third quarter of 1998. For the first nine months of 1999, mortgage banking noninterest income was $503.4 million, an increase of 34 percent over the $375.1 million earned in the same period a year ago. For this same time period, origination volume increased 5 percent. Capital Markets Fee income in First Tennessee Capital Markets decreased 21 percent from the previous year's third quarter ($27.8 million in the third quarter of 1999 compared with $35.4 million in the third quarter of 1998). These results are primarily due to a change in product mix driven by our customers regarding their cash needs over the millennium millennium [Lat.,=1,000 years], the period of 1,000 years in which, according to some schools of Christian eschatology, Christ will reign again gloriously on earth. Belief in the millennium, based on Rev. 20, has recurred in Christianity since the earliest times. . These concerns have forced many of our customers to become liquid and put their money in cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments. Volume, however, continued to be strong, with an 18 percent increase in total securities bought and sold for customers from the previous year. First Tennessee Capital Markets continued to rank as one of the largest U.S. agency underwriters in the nation during the quarter. For the first nine months of 1999, capital markets' noninterest income was $102.4 million, a decrease of only 1 percent despite the record performance experienced during the same nine-month period in 1998. Other fee income For the third quarter of 1999, deposit transactions and cash management fees increased 17 percent to $27.4 million primarily from growth in customer service charges. Merchant processing fees grew 28 percent to $12.9 million primarily from a change in the mix of the customer base, more reliance on direct customer volume and pricing changes. Cardholder card·hold·er n. One who holds a card, especially a credit card. card  hold fees increased 31 percent to $7.1 million because of
price increases and higher interchange An interchange is a location where two things meet, usually perform some kind of exchange, and possibly go on their ways again. It is most commonly used in four contexts:
Other income and commissions grew 64 percent to $34.6 million from the third quarter of 1998. Excluding the NPC acquisition, other income and commissions would have grown 31 percent. In addition to the NPC acquisition, growth in the Other category included the sale of the Tunica, Mississippi Tunica is a town in Tunica County, Mississippi, United States, located near the Mississippi River. Historically part of an agricultural area, the town lies on the fringe of a growing gambling resort area, with major casinos attracting visitors from nearby Memphis, Tennessee and , bank branch ($4.2 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ). Contributors to the remaining growth included insurance premiums and commissions, which were up 48 percent, and check clearing fees, which increased 19 percent. Security gains and losses during the third quarter of 1999 included the gain from the sale of a software application company investment by First Tennessee's Hickory Hickory, city, United States Hickory, city (1990 pop. 28,301), Burke and Catawba counties, W N.C., at the foot of the Blue Ridge Mts.; inc. 1870. It is a processing and trade center for an abundant agricultural region (grain, soybeans, poultry, hogs, Venture Capital Company. For the first nine months of 1999, fees from deposit transactions and cash management increased 17 percent, merchant processing fees increased 51 percent, cardholder fees increased 19 percent, trust and investment management fees increased 18 percent, and other income and commissions increased 49 percent. Excluding NPC, other income and commissions would have increased 31 percent. Net Interest Income Net interest income (on a fully taxable equivalent basis) increased 9 percent to $148.1 million in the third quarter of 1999 due primarily to strong loan growth and improvement in net interest margin. The net interest margin improved to 3.82 percent for the third quarter of 1999 from 3.75 percent for the same period in 1998. The regional banking group's margin improved to 4.97 percent in the third quarter of 1999 from 4.88 percent in the third quarter of 1998. For the first nine months of 1999, net interest income increased 12 percent to $444.1 million primarily as a result of the 14 percent increase in earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin . The year-to-date consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: margin for 1999 was 3.80 percent compared with 3.87 percent for the same period in 1998. Noninterest Expense Total noninterest expense (operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. ) increased 7 percent to $314.4 million for the third quarter of 1999. This growth rate was affected by the NPC acquisition. Excluding this acquisition, total operating expense would have increased 5 percent. Additionally, expense growth in mortgage banking and capital markets fluctuates based on activity levels. Excluding the NPC acquisition and these two business lines, the remaining operating expense grew 10 percent. The reasons behind this growth included: investments to expand consumer lending Consumer lending or consumer loans refers to any type of loan product that is not a mortgage; such as a car, boat, manufactured home, home equity loan, home equity line of credit, signature loan, signature line of credit, recreational vehicle, or Certificate of Deposit loans. beyond our traditional markets, growth in the insurance business, costs for the marketing campaign to increase awareness of our new brand, branch expansion in targeted growth markets, and increased technology conversion expenses. Employee compensation, incentives and benefits (personnel expense), the largest component of noninterest expense, increased 6 percent from the previous year. Excluding NPC, personnel expenses increased 3 percent. Personnel expense decreased 25 percent at capital markets and increased only 2 percent at mortgage banking due to lower commissions, workforce reductions, and changes in management incentive compensation plans, offset by increases in non-origination functions at mortgage banking. With the increase in interest rates and the resulting decline in prepayments, amortization of mortgage servicing rights decreased 21 percent from $28.9 million in the third quarter of 1998 to $22.8 million for the same period in 1999. The majority of the 11 percent growth in other expense was related to increases in mortgage banking activities. Mortgage banking expense growth was affected by increased hedging expenses attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a substantially larger servicing portfolio, additional technology-related conversion and training programs and relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. costs related to consolidating facilities. For the first nine months of 1999, total operating expense increased 26 percent to $981.9 million, and personnel expense increased 25 percent. Excluding NPC, both total operating expense and personnel expense increased 24 percent. The higher volume and change in the mix of products sold at FT Mortgage and capital markets earlier in the year affected the nine-month growth rate in expenses. Excluding NPC, mortgage banking and capital markets, total operating expense increased 14 percent. Amortization of mortgage servicing rights increased 18 percent for the nine-month period and other expenses, principally related to mortgage banking, increased 26 percent. Income Taxes The effective tax rate decreased to a 33.9 percent rate in the third quarter of 1999 from a 36.1 percent rate in the third quarter of 1998. For the nine-month period, the effective tax rate was 35.2 percent in 1999 compared with a rate of 35.7 percent for the same period in 1998. This decrease was largely due to an adjustment of deferred tax liabilities resulting from a lower effective state tax rate. Average Balance Sheet Total average assets for the third quarter grew 10 percent from the previous year to $18.6 billion. The continuance The adjournment or postponement of an action pending in a court to a later date of the same or another session of the court, granted by a court in response to a motion made by a party to a lawsuit. of favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. economic conditions led to the 9 percent growth in total average managed loans (including the consumer loans and permanent mortgages that have been securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. and sold with servicing retained) for the third quarter. Managed consumer loans grew 18 percent from the previous year, with First Horizon Equity Lending experiencing strong growth. Commercial loans grew 7 percent over the previous year. Mortgage loans held for sale (mortgage warehouse) increased 5 percent from the third quarter of 1998 but declined from the high levels experienced earlier in 1999 as a result of a slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in origination volumes. Average investment securities increased 1 percent from the previous year. Interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid core deposits declined minimally from the previous year, and total core deposits increased slightly. Purchased funds grew 20 percent and funded both loan growth and growth in mortgage banking. Average shareholders' equity grew 21 percent from the third quarter of 1998, reflecting strong internal capital generation. The quarterly total capital to assets ratio increased to 7.1 percent in the third quarter of 1999 from 6.6 percent in the third quarter of 1998. Diluted shares outstanding have increased approximately 2.7 million since the third quarter of 1998 due to stock option exercises exceeding shares repurchased. Asset Quality The provision for loan losses increased $1.0 million from the third quarter of 1998 due to loan growth and inherent risk in the loan portfolio. The allowance for loan losses to total loans at September 30, 1999, was 1.56 percent compared with 1.63 percent at September 30, 1998. The ratio of nonperforming assets Nonperforming asset An asset that is not effectively producing income, such as an overdue loan. nonperforming asset An asset that produces no income. to total loans was .56 percent for the third quarter of 1999 compared to .52 percent for the same period in 1998. The ratio of net charge-offs to average loans increased to .56 percent for the third quarter of 1999, from .38 percent for the third quarter of 1998. This increase was primarily due to a change in the mix of consumer loan products to those with higher risk/return profiles. (See accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. tables for additional information) GENERAL INFORMATION Description -- First Tennessee is a high-performing, nationwide, diversified diversified (di·verˑ·s financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. institution. -- One of the 50 largest bank holding companies in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. in asset size and market capitalization. Banking and other financial services are provided through: -- The regional banking group (includes trust services and credit card) -- Three national lines of business - -- FT Mortgage Companies -- First Tennessee Capital Markets -- Transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. includes credit card merchant processing, MONEYBELT (our automated teller machine automated teller machine (ATM), device used by bank customers to process account transactions. Typically, a user inserts into the ATM a special plastic card that is encoded with information on a magnetic strip. network), and Express Processing (First Express - our nationwide check clearing operation - and our retail lockbox Lockbox A collection and processing service provided to firms by banks, which collect payments from a dedicated postal box to which the firm directs its customers to send payment to. products). Stock Information -- Our common stock is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol FTN -- Listed in most newspapers as FstTN Ntl -- Included in the Standard and Poor's Noun 1. Standard and Poor's - a broadly based stock market index Standard and Poor's Index MidCap mid·cap adj. 1. Or or relating to corporations whose retained earnings and outstanding shares of common stock have a value between those of small cap companies and large cap corporations. 2. 400 Index -0-
FIRST TENNESSEE NATIONAL CORPORATION
PER SHARE DATA AND FINANCIAL RATIOS
(Unaudited)
Year-to-date
September 30
-------------------- Growth
1999 1998 Rate (%)
--------- ---------- --------
PER SHARE DATA:
---------------
Diluted earnings per share $ 1.37 $ 1.22 12.3 +
Dividends declared .57 .495
SELECTED FINANCIAL RATIOS:
----------------
Return on average assets 1.32% 1.35%
Return on average shareholders' equity 20.9 22.1
Quarter Ended
September 30
-------------------- Growth
1999 1998 Rate (%)
--------- ---------- --------
PER SHARE DATA:
---------------
Diluted earnings per share $ .52 $ .47 10.6 +
Dividends declared .19 .165
SELECTED FINANCIAL RATIOS:
---------------
Return on average assets 1.48% 1.45%
Return on average shareholders' equity 22.6 24.4
QUARTERLY INFORMATION
3Q99 2Q99 1Q99 4Q98 3Q98
----- ----- ----- ----- -----
PER SHARE DATA:
---------------
Diluted earnings per share $ .52 $ .45 $ .40 $ .50 $ .47
Dividends declared .19 .19 .19 .19 .165
SELECTED FINANCIAL RATIOS:
--------------------------
Return on average assets 1.48% 1.33% 1.15% 1.37% 1.45%
Return on average shareholders'
equity 22.6 20.9 19.1 24.4 24.4
T-1
FIRST TENNESSEE NATIONAL CORPORATION
STATEMENTS OF INCOME - QUARTERLY GROWTH
(Unaudited)
Quarter Ended
September 30
---------------------- Growth
(THOUSANDS) 1999 1998 Rate (%)
--------------------- ----------- ---------- ----------
Interest income $303,212 $288,267 5.2 +
Less interest expense 155,885 153,606 1.5 +
----------- ----------
Net interest income 147,327 134,661 9.4 +
Provision for loan losses 14,110 13,127 7.5 +
----------- ----------
Net interest income after
provision for loan
losses 133,217 121,534 9.6 +
Noninterest income:
Mortgage banking 158,919 160,063 .7 --
Capital markets 27,832 35,370 21.3 --
Deposit transactions and
cash management 27,431 23,358 17.4 +
Merchant processing 12,880 10,074 27.9 +
Cardholder fees 7,084 5,392 31.4 +
Trust and investment
management 15,715 12,619 24.5 +
Securities gains 1,859 9 N/M
Other income and
commissions 34,592 21,035 64.4 +
----------- ----------
Total noninterest income 286,312 267,920 6.9 +
----------- ----------
Adjusted gross income
after provision for
loan losses 419,529 389,454 7.7 +
Noninterest expense:
Employee compensation,
incentives and
benefits 154,175 145,038 6.3 +
Occupancy, equipment
rentals, depreciation,
and maintenance 34,324 25,179 36.3 +
Amortization of mortgage
servicing rights 22,784 28,851 21.0 --
Amortization of intangible
assets 2,629 2,726 3.6 --
Other 100,528 90,913 10.6 +
----------- ----------
Total noninterest expense 314,440 292,707 7.4 +
----------- ----------
Income before income
taxes 105,089 96,747 8.6 +
Applicable income taxes 35,671 34,927 2.1 +
----------- ----------
Net income $ 69,418 $ 61,820 12.3 +
=========== ==========
Net interest income - FTE $148,075 $135,651 9.2 +
N/M=not meaningful
T-2
FIRST TENNESSEE NATIONAL CORPORATION
STATEMENTS OF INCOME - YEARLY GROWTH
(Unaudited)
Year-to-date
September 30
------------------------ Growth
(THOUSANDS) 1999 1998 Rate (%)
----------- --------- --------- --------
Interest income $ 896,655 $ 821,429 9.2 +
Less interest expense 454,795 427,439 6.4 +
--------- ---------
Net interest income 441,860 393,990 12.2 +
Provision for loan losses 43,915 39,427 11.4 +
--------- ---------
Net interest income after
provision for loan
losses 397,945 354,563 12.2 +
Noninterest income:
Mortgage banking 503,393 375,120 34.2 +
Capital markets 102,397 103,590 1.2 --
Deposit transactions and
cash management 77,255 66,125 16.8 +
Merchant processing 37,805 25,023 51.1 +
Cardholder fees 18,098 15,258 18.6 +
Trust and investment
management 45,059 38,080 18.3 +
Securities gains/(losses) 1,787 (53) N/A
Other income and
commissions 81,302 54,677 48.7 +
--------- ---------
Total noninterest income 867,096 677,820 27.9 +
--------- ---------
Adjusted gross income
after provision for
loan losses 1,265,041 1,032,383 22.5 +
Noninterest expense:
Employee compensation,
incentives and
benefits 490,461 391,452 25.3 +
Occupancy, equipment
rentals, depreciation,
and maintenance 94,139 68,981 36.5 +
Amortization of mortgage
servicing rights 83,619 70,796 18.1 +
Amortization of intangible
assets 7,806 8,021 2.7 --
Other 305,903 242,735 26.0 +
--------- ---------
Total noninterest expense 981,928 781,985 25.6 +
--------- ---------
Income before income
taxes 283,113 250,398 13.1 +
Applicable income taxes 99,694 89,477 11.4 +
--------- ---------
Net income $ 183,419 $ 160,921 14.0 +
========= =========
Net interest income - FTE $ 444,131 $ 397,027 11.9 +
T-3
FIRST TENNESSEE NATIONAL CORPORATION
STATEMENTS OF INCOME - QUARTERLY
(Unaudited)
(THOUSANDS) 3Q99 2Q99 1Q99 4Q98 3Q98
---------------------- -------- -------- -------- -------- --------
Interest income $303,212 $293,177 $300,266 $312,348 $288,267
Less interest expense 155,885 146,811 152,099 165,799 153,606
-------- -------- -------- -------- --------
Net interest income 147,327 146,366 148,167 146,549 134,661
Provision for loan
losses 14,110 14,979 14,826 11,924 13,127
-------- -------- -------- -------- --------
Net interest income after
provision for loan
losses 133,217 131,387 133,341 134,625 121,534
Noninterest income:
Mortgage banking 158,919 175,696 168,778 183,246 160,063
Capital markets 27,832 30,177 44,388 43,763 35,370
Deposit transactions
and cash management 27,431 26,608 23,216 24,319 23,358
Merchant processing 12,880 14,216 10,709 12,439 10,074
Cardholder fees 7,084 6,052 4,962 5,788 5,392
Trust and investment
management 15,715 14,753 14,591 13,118 12,619
Securities gains/
(losses) 1,859 (38) (34) 4,029 9
Other income and
commissions 34,592 26,757 19,953 20,981 21,035
-------- -------- -------- -------- --------
Total noninterest
income 286,312 294,221 286,563 307,683 267,920
-------- -------- -------- -------- --------
Adjusted gross income
after provision for
loan losses 419,529 425,608 419,904 442,308 389,454
Noninterest expense:
Employee compensation,
incentives and
benefits 154,175 162,391 173,895 172,124 145,038
Occupancy, equipment
rentals, depreciation,
and maintenance 34,324 30,695 29,120 28,211 25,179
Amortization of mortgage
servicing rights 22,784 29,937 30,898 24,711 28,851
Amortization of
intangible assets 2,629 2,601 2,576 3,093 2,726
Other 100,528 105,067 100,308 111,645 90,913
-------- -------- -------- -------- --------
Total noninterest
expense 314,440 330,691 336,797 339,784 292,707
-------- -------- -------- -------- --------
Income before income
taxes 105,089 94,917 83,107 102,524 96,747
Applicable income
taxes 35,671 33,945 30,078 37,065 34,927
-------- -------- -------- -------- --------
Net income $ 69,418 $ 60,972 $ 53,029 $ 65,459 $ 61,820
======== ======== ======== ======== ========
Net interest
income - FTE $148,075 $147,118 $148,938 $147,316 $135,651
T-4
FIRST TENNESSEE NATIONAL CORPORATION
AVERAGE STATEMENTS OF CONDITION - QUARTERLY GROWTH
(Unaudited)
Quarter Ended
September 30
--------------------------
Growth
(THOUSANDS) 1999 1998 Rate (%)
----------------- ------------ ------------ ---------
Loans, net of unearned income:
Commercial $ 4,304,072 $ 4,010,127 7.3 +
Consumer (a) 3,048,660 2,698,734 13.0 +
Permanent mortgage (a) 460,167 390,867 17.7 +
Credit card receivables 572,848 569,566 .6 +
Real estate construction 385,279 409,237 5.9 --
Nonaccrual - Regional
Banking Group 12,125 7,235 67.6 +
Nonaccrual - Mortgage
Banking 20,061 16,420 22.2 +
------------ ------------
Total loans, net of
unearned income (a) 8,803,212 8,102,186 8.7 +
Investment securities 1,979,309 1,951,020 1.4 +
REMIC securities (a) 813,351 664,782 22.3 +
Mortgage loans held for sale 3,025,666 2,868,570 5.5 +
Other earning assets 875,563 860,596 1.7 +
------------ ------------
Total earning assets 15,497,101 14,447,154 7.3 +
Cash and due from banks 809,680 657,393 23.2 +
Other assets 2,326,546 1,772,563 31.3 +
------------ ------------
Total assets $18,633,327 $16,877,110 10.4 +
============ ============
Certificates of deposit under
$100,000 and other time $ 2,371,002 $ 2,564,143 7.5 --
Other interest-bearing deposits 3,861,561 3,724,212 3.7 +
------------ ------------
Total interest-bearing
core deposits 6,232,563 6,288,355 .9 --
Certificates of deposit
$100,000 and more 2,903,090 2,088,210 39.0 +
Short-term borrowed funds 4,245,027 3,847,308 10.3 +
Term borrowings 335,014 266,484 25.7 +
------------ ------------
Total interest-bearing
liabilities 13,715,694 12,490,357 9.8 +
Demand deposits 1,853,294 1,751,334 5.8 +
Other noninterest-bearing
deposits 1,005,785 932,098 7.9 +
Other liabilities 741,621 597,331 24.2 +
Qualifying capital securities (b) 100,000 100,000 -
Shareholders' equity 1,216,933 1,005,990 21.0 +
------------ ------------
Total liabilities and
shareholders' equity $18,633,327 $16,877,110 10.4 +
============ ============
(a) As a result of the Real Estate Mortgage Investment Conduit certain
securitized consumer and permanent mortgage loans are now
classified as REMIC securities
(b) Guaranteed preferred beneficial interests in First Tennessee's
junior subordinated debentures
T-5
FIRST TENNESSEE NATIONAL CORPORATION
AVERAGE STATEMENTS OF CONDITION - YEARLY GROWTH
(Unaudited)
Year-to-date
September 30
-------------------------
Growth
(THOUSANDS) 1999 1998 Rate (%)
------------------------------ ----------- ----------- ---------
Loans, net of unearned income:
Commercial $ 4,235,261 $ 3,917,051 8.1 +
Consumer (c) 3,046,091 2,750,132 10.8 +
Permanent mortgage (c) 444,404 503,247 11.7 --
Credit card receivables 570,920 560,384 1.9 +
Real estate construction 380,745 410,799 7.3 --
Nonaccrual - Regional
Banking Group 11,900 8,587 38.6 +
Nonaccrual - Mortgage
Banking 19,967 24,306 17.9 --
----------- -----------
Total loans, net of
unearned income (c) 8,709,288 8,174,506 6.5 +
Investment securities 1,943,253 1,999,695 2.8 --
REMIC securities (c) 697,077 381,197 82.9 +
Mortgage loans held for sale 3,369,608 2,430,267 38.7 +
Other earning assets 886,069 701,355 26.3 +
----------- -----------
Total earning assets 15,605,295 13,687,020 14.0 +
Cash and due from banks 748,023 684,410 9.3 +
Other assets 2,212,702 1,611,208 37.3 +
----------- -----------
Total assets $18,566,020 $15,982,638 16.2 +
=========== ===========
Certificates of deposit under
$100,000 and other time $ 2,414,428 $ 2,615,703 7.7 --
Other interest-bearing deposits 3,928,938 3,726,170 5.4 +
----------- -----------
Total interest-bearing
core deposits 6,343,366 6,341,873 -
Certificates of deposit
$100,000 and more 2,991,974 1,716,823 74.3 +
Short-term borrowed funds 4,018,367 3,439,577 16.8 +
Term borrowings 371,767 234,745 58.4 +
----------- -----------
Total interest-bearing
liabilities 13,725,474 11,733,018 17.0 +
Demand deposits 1,841,817 1,713,496 7.5 +
Other noninterest-bearing
deposits 998,767 864,563 15.5 +
Other liabilities 728,239 599,245 21.5 +
Qualifying capital securities (d) 100,000 100,000 -
Shareholders' equity 1,171,723 972,316 20.5 +
----------- -----------
Total liabilities and
shareholders' equity $18,566,020 $15,982,638 16.2 +
=========== ===========
(c) As a result of the Real Estate Mortgage Investment Conduit certain
securitized consumer and permanent mortgage loans are now
classified as REMIC securities
(d) Guaranteed preferred beneficial interests in First Tennessee's
junior subordinated debentures
T-6
FIRST TENNESSEE NATIONAL CORPORATION
AVERAGE STATEMENTS OF CONDITION - QUARTERLY
(Unaudited)
(MILLIONS) 3Q99 2Q99 1Q99 4Q98 3Q98
--------------------- --------- --------- --------- --------- ---------
Loans, net of
unearned income:
Commercial $4,304.1 $4,249.1 $4,150.9 $4,112.3 $4,010.1
Consumer(e) 3,048.6 2,999.7 3,090.4 2,925.8 2,698.7
Permanent mortgage(e) 460.2 448.3 424.3 417.5 390.9
Credit card
receivables 572.8 567.1 572.9 572.8 569.6
Real estate
construction 385.3 376.4 380.5 389.2 409.3
Nonaccrual - Regional
Banking Group 12.1 12.6 10.9 7.3 7.2
Nonaccrual - Mortgage
Banking 20.1 16.6 23.3 17.9 16.4
--------- --------- --------- --------- ---------
Total loans, net of
unearned income(e) 8,803.2 8,669.8 8,653.2 8,442.8 8,102.2
Investment
securities 1,979.3 1,961.0 1,888.4 1,945.1 1,951.0
REMIC securities(e) 813.4 733.4 541.5 613.8 664.8
Mortgage loans
held for sale 3,025.7 3,154.9 3,938.4 4,338.3 2,868.6
Other earning
assets 875.5 946.6 835.6 860.2 860.6
--------- --------- --------- --------- ---------
Total earning assets 15,497.1 15,465.7 15,857.1 16,200.2 14,447.2
Cash and due from banks 809.7 730.6 702.6 736.5 657.4
Other assets 2,326.5 2,245.2 2,063.4 1,974.2 1,772.5
--------- --------- --------- --------- ---------
Total assets $18,633.3 $18,441.5 $18,623.1 $18,910.9 $16,877.1
========= ========= ========= ========= =========
Certificates of deposit
under $100,000 and
other time $2,371.0 $2,414.7 $2,458.5 $2,508.7 $2,564.2
Other interest-bearing
deposits 3,861.6 3,950.1 3,976.4 3,825.4 3,724.2
--------- --------- --------- --------- ---------
Total
interest-bearing
core deposits 6,232.6 6,364.8 6,434.9 6,334.1 6,288.4
Certificates of deposit
$100,000 and more 2,903.1 2,714.7 3,363.2 2,810.7 2,088.2
Short-term borrowed
funds 4,245.0 4,145.5 3,658.1 4,639.0 3,847.3
Term borrowings 335.0 376.8 404.3 305.8 266.5
--------- --------- --------- --------- ---------
Total
interest-bearing
liabilities 13,715.7 13,601.8 13,860.5 14,089.6 12,490.4
Demand deposits 1,853.3 1,835.3 1,836.7 1,854.2 1,751.3
Other noninterest-
bearing deposits 1,005.8 1,010.2 980.0 1,064.7 932.1
Other liabilities 741.6 723.3 719.6 736.1 597.3
Qualifying capital
securities (f) 100.0 100.0 100.0 100.0 100.0
Shareholders' equity 1,216.9 1,170.9 1,126.3 1,066.3 1,006.0
--------- --------- --------- --------- ---------
Total liabilities
and shareholders'
equity $18,633.3 $18,441.5 $18,623.1 $18,910.9 $16,877.1
========= ========= ========= ========= =========
Diluted shares
outstanding 134.2 134.7 133.8 132.1 131.5
(e) As a result of the Real Estate Mortgage Investment Conduit
certain securitized consumer and permanent mortgage loans are now
classified as REMIC securities
(f) Guaranteed preferred beneficial interests in First Tennessee's
junior subordinated debentures
T-7
FIRST TENNESSEE NATIONAL CORPORATION
PERIOD-END STATEMENTS OF CONDITION
(Unaudited)
September 30 Growth
(THOUSANDS) 1999 1998 Rate (%)
------------------ ----------- ----------- ---------
Loans, net of unearned income:
Commercial $ 4,330,516 $ 4,076,573 6.2 +
Consumer (g) 3,136,311 2,832,518 10.7 +
Permanent mortgage (g) 470,550 408,034 15.3 +
Credit card receivables 578,370 573,248 .9 +
Real estate construction 407,882 397,686 2.6 +
Nonaccrual - Regional
Banking Group 11,476 8,437 36.0 +
Nonaccrual - Mortgage
Banking 21,215 19,220 10.4 +
----------- -----------
Total loans, net of
unearned income (g) 8,956,320 8,315,716 7.7 +
Investment securities 1,981,567 1,956,927 1.3 +
REMIC securities (g) 781,882 637,863 22.6 +
Mortgage loans held for sale 2,910,874 2,841,957 2.4 +
Other earning assets 801,792 534,777 49.9 +
----------- -----------
Total earning assets 15,432,435 14,287,240 8.0 +
Cash and due from banks 860,519 726,605 18.4 +
Other assets 2,809,043 2,234,164 25.7 +
----------- -----------
Total assets $19,101,997 $17,248,009 10.7 +
=========== ===========
Certificates of deposit under
$100,000 and other time $ 2,359,337 $ 2,535,356 6.9 --
Other interest-bearing deposits 3,778,226 3,719,061 1.6 +
----------- -----------
Total interest-bearing
core deposits 6,137,563 6,254,417 1.9 --
Certificates of deposit
$100,000 and more 3,536,952 2,129,984 66.1 +
Short-term borrowed funds 3,474,235 3,472,743 -
Term borrowings 376,877 266,468 41.4 +
----------- -----------
Total interest-bearing
liabilities 13,525,627 12,123,612 11.6 +
Demand deposits 1,889,122 1,840,041 2.7 +
Other noninterest-bearing
deposits 859,735 876,047 1.9 --
Other liabilities 1,480,796 1,257,096 17.8 +
Qualifying capital securities (h) 100,000 100,000 -
Shareholders' equity 1,246,717 1,051,213 18.6 +
----------- -----------
Total liabilities and
shareholders' equity $19,101,997 $17,248,009 10.7 +
=========== ===========
(g) As a result of the Real Estate Mortgage Investment Conduit certain
securitized consumer and permanent mortgage loans are now
classified as REMIC securities
(h) Guaranteed preferred beneficial interests in First Tennessee's
junior subordinated debentures
T-8
FIRST TENNESSEE NATIONAL CORPORATION
ASSET QUALITY HIGHLIGHTS
(Dollars in thousands, Unaudited)
(THOUSANDS) 3Q99 2Q99 1Q99 4Q98 3Q98
------------- --------- --------- --------- --------- ---------
ALLOWANCE FOR
LOAN LOSSES:
Beginning Reserve $138,595 $139,387 $136,013 $135,413 $129,858
Provision 14,110 14,979 14,826 11,924 13,127
Securitization
adjustment - (1,790) - - -
Allowance from
acquisition - - - - 140
Adjustment due to
divestiture (875) - - - -
Charge-offs (14,347) (16,102) (13,541) (13,326) (11,081)
Loan recoveries 1,943 2,121 2,089 2,002 3,369
-------- --------- --------- --------- ---------
Ending Balance $139,426 $138,595 $139,387 $136,013 $135,413
======== ========= ========= ========= =========
NONPERFORMING ASSETS:
Nonperforming loans $ 11,476 $ 11,633 $ 12,629 $ 11,428 $ 8,437
Foreclosed real
estate 5,825 5,267 6,121 5,091 4,703
Other assets 85 202 189 199 207
-------- --------- --------- --------- ---------
Total Regional
Banking Group 17,386 17,102 18,939 16,718 13,347
-------- --------- --------- --------- ---------
Mortgage Banking
nonperforming
loans 21,215 16,874 18,166 16,379 19,220
Mortgage Banking
foreclosed real
estate 11,240 11,701 10,749 11,151 10,810
-------- --------- --------- --------- ---------
Total nonperforming
assets $ 49,841 $ 45,677 $ 47,854 $ 44,248 $ 43,377
======== ========= ========= ========= =========
Loans and leases
past due 90 days
or more $ 24,004 $ 23,593 $ 28,006 $ 31,603 $ 34,012
T-9
FIRST TENNESSEE NATIONAL CORPORATION
ASSET QUALITY HIGHLIGHTS
(Unaudited)
3Q99 2Q99 1Q99 4Q98 3Q98
------ --------- --------- --------- ---------
TOTAL FIRST TENNESSEE:
Nonperforming loans
ratio (i) .37% .33% .35% .32% .33%
Nonperforming assets
ratio (j) .56 .53 .54 .52 .52
Allowance to total
loans 1.56 1.60 1.59 1.59 1.63
Allowance to
nonperforming loans 426.50 486.18 452.63 489.13 489.62
Allowance to
nonperforming assets 279.74 303.42 291.28 307.39 312.18
Net charge-off
ratio (k) .56 .65 .53 .54 .38
REGIONAL BANKING GROUP:
Nonperforming loans
ratio (i) .14% .14% .15% .14% .11%
Nonperforming assets
ratio (j) .20 .21 .22 .20 .17
Allowance to
total loans 1.53 1.58 1.59 1.60 1.64
Allowance to
nonperforming loans 1,134.93 1,121.05 1,058.84 1,150.06 1,550.99
Allowance to
nonperforming assets 749.14 762.55 706.06 786.15 980.42
(i) Ratio is nonperforming loans to total loans
(j) Ratio is nonperforming assets to total loans plus foreclosed real
estate and other assets
(k) Ratio is net charge-offs to average loans
T-10
FIRST TENNESSEE NATIONAL CORPORATION
NET INTEREST MARGIN HIGHLIGHTS
(Unaudited)
3Q99 2Q99 1Q99 4Q98 3Q98
------------------------- ------- ------- ------- ------- -------
REGIONAL BANKING GROUP
Yields on earning assets 7.98% 7.80% 7.84% 8.09% 8.23%
Rates paid on interest-
bearing liabilities 3.90 3.73 3.89 4.18 4.38
------- ------- ------- ------- -------
Net interest spread 4.08 4.07 3.95 3.91 3.85
------- ------- ------- ------- -------
Effect of interest-free
sources .74 .77 .80 .89 .90
Loan fees .15 .13 .15 .15 .13
FRB interest and penalties - .01 .01 - -
------- ------- ------- ------- -------
Net interest margin-
REGIONAL BANKING GROUP 4.97% 4.98% 4.91% 4.95% 4.88%
MORTGAGE BANKING (1.00) (.99) (1.03) (1.16) (.96)
CAPITAL MARKETS (.17) (.20) (.13) (.17) (.20)
TRANSACTION PROCESSING .02 .02 .01 .02 .03
------- ------- ------- ------- -------
Net interest margin 3.82% 3.81% 3.76% 3.64% 3.75%
======= ======= ======= ======= =======
T-11
FIRST TENNESSEE NATIONAL CORPORATION
CAPITAL HIGHLIGHTS
(Dollars in millions except per share amounts, Unaudited)
3Q99 2Q99 1Q99 4Q98 3Q98
----------------- --------- --------- --------- --------- ---------
Tier 1 Capital (l) $1,206.5 $1,135.1 $1,090.6 $1,038.5 $1,017.3
Tier 2 Capital (l) 466.2 465.4 466.1 537.5 384.1
--------- --------- --------- --------- ---------
Total Capital (l) $1,672.7 $1,600.5 $1,556.7 $1,576.0 $1,401.4
========= ========= ========= ========= =========
Risk-Adjusted
Assets (l) $13,836.9 $13,340.5 $13,217.8 $13,232.7 $11,952.2
Tier 1 Ratio (l) 8.72% 8.51% 8.25% 7.85% 8.51%
Tier 2 Ratio (l) 3.37 3.49 3.53 4.06 3.21
--------- --------- --------- --------- ---------
Total Capital
Ratio (l) 12.09% 12.00% 11.78% 11.91% 11.72%
========= ========= ========= ========= =========
Leverage Ratio (l) 6.52% 6.21% 5.91% 5.54% 6.08%
Shareholders'
Equity/Assets
Ratio (m) 6.53 6.35 6.05 5.64 5.96
Total Capital (n)/
Assets Ratio (m) 7.07 6.89 6.58 6.17 6.55
Book Value $ 9.51 $ 9.12 $ 8.88 $ 8.50 $ 8.19
(l) Current quarter is an estimate
(m) Calculated on average balances
(n) Total capital includes shareholders' equity and guaranteed
preferred beneficial interests in First Tennessee's junior
subordinated debentures
T-12
FIRST TENNESSEE NATIONAL CORPORATION
REGIONAL BANKING GROUP HIGHLIGHTS
(Earnings in thousands, Unaudited)
(Statistics in millions)
3Q99 2Q99 1Q99 4Q98 3Q98
-------- -------- -------- -------- --------
REGIONAL BANKING GROUP
----------------------
Total Revenues $196,432 $189,531 $177,466 $179,370 $172,828
Loan Loss Provision 12,498 12,146 12,942 11,737 11,174
Operating Expenses 114,638 114,691 107,377 109,902 102,713
-------- -------- -------- -------- --------
Pre-Tax Income $69,296 $62,694 $57,147 $57,731 $58,941
RETAIL/COMMERCIAL BANK
----------------------
Total Revenues $163,633 $158,771 $147,655 $150,232 $144,985
Loan Loss Provision 7,268 6,808 7,743 6,523 6,113
Operating Expenses 98,498 99,646 92,154 95,449 88,137
-------- -------- -------- -------- --------
Pre-Tax Income $57,867 $52,317 $47,758 $48,260 $50,735
CREDIT CARD
-----------
Total Revenues $17,341 $16,044 $15,461 $15,598 $15,281
Loan Loss Provision 5,230 5,338 5,199 5,214 5,061
Operating Expenses 5,825 6,253 5,990 5,686 6,076
-------- -------- -------- -------- --------
Pre-Tax Income $6,286 $4,453 $4,272 $4,698 $4,144
KEY STATISTICS:
Outstandings $578.4 $576.4 $560.7 $594.5 $573.2
Net Charge-offs/
Average Loans 3.55% 3.51% 3.65% 3.74% 3.52%
TRUST SERVICES
--------------
Total Revenues $15,458 $14,716 $14,350 $13,540 $12,562
Operating Expenses 10,315 8,792 9,233 8,767 8,500
-------- -------- -------- -------- --------
Pre-Tax Income $5,143 $5,924 $5,117 $4,773 $4,062
KEY STATISTICS:
Managed Assets (o)
(FTBNA) $9,057.1 $9,416.4 $9,051.8 $8,903.8 $8,183.4
(o) Current quarter is an estimate
The business line financial information excludes significant
nonrecurring items, such as security gains and losses. Expenses have
been allocated based on management's best estimates, and equity has
been assigned to reflect the inherent risk in each individual business
line.
T-13
FIRST TENNESSEE NATIONAL CORPORATION
NATIONAL BUSINESS LINES HIGHLIGHTS
(Earnings in thousands, Unaudited)
3Q99 2Q99 1Q99 4Q98 3Q98
-------- -------- -------- -------- --------
MORTGAGE BANKING
----------------
Total Revenues $174,630 $192,020 $190,012 $203,442 $173,031
Loan Loss Provision 1,612 2,833 1,884 188 1,953
Operating Expenses 152,097 170,239 179,140 177,675 144,670
-------- -------- -------- -------- --------
Pre-Tax Income $20,921 $18,948 $8,988 $25,579 $26,408
Key Statistics
(in millions):
Origination Volume $4,387.1 $5,639.3 $5,968.5 $8,075.5 $5,636.3
Servicing
Portfolio $48,656.8 $46,145.0 $42,883.5 $39,737.9 $35,292.6
CAPITAL MARKETS
---------------
Total Revenues $28,814 $31,409 $46,259 $44,759 $36,619
Operating Expenses 20,886 24,077 32,604 33,118 26,625
-------- -------- -------- -------- --------
Pre-Tax Income $7,928 $7,332 $13,655 $11,641 $9,994
Key Statistics
(in millions):
Total Securities
Bought/Sold $128,785.5 $138,765.6 $145,882.7 $137,964.4 $109,140.5
Total
Underwritings $5,936.6 $8,036.0 $18,424.8 $21,410.2 $12,789.3
TRANSACTION
PROCESSING
------------
Total Revenues $32,652 $28,419 $21,797 $23,399 $21,089
Operating Expenses 24,284 19,655 15,645 16,442 16,667
-------- -------- -------- -------- --------
Pre-Tax Income $8,368 $8,764 $6,152 $6,957 $4,422
Key Statistics
(in thousands):
Merchant
Transactions
Processed 32,930.8 43,132.4 40,175.8 41,777.3 42,650.9
MONEY BELT
Transactions
Processed
(correspondent) 7,979.2 7,737.4 6,721.3 7,045.3 7,060.4
First Express
Transactions
Processed 122,403.6 90,721.3 65,279.8 65,644.7 66,237.6
The business line financial information excludes significant
nonrecurring items, such as security gains and losses. Expenses have
been allocated based on management's best estimates, and equity has
been assigned to reflect the inherent risk in each individual business
line.
T-14
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