Fourth Quarter 2017 vs. Third Quarter 2017
Consolidated
• On November 30, 2017, FHN closed its previously announced merger with Capital Bank Financial ("Capital Bank" or "CBF") using the purchase business
combinations method, increasing its balance sheet by $10.6 billion
• In December 2017, Congress enacted the Tax Cuts and Jobs Act ("the Tax Act"), which resulted in an estimated $82.0 million impact primarily related to a
decrease in the valuation of FHN's net deferred tax asset balance, significantly impacting FHN's results for both fourth quarter and 2017. The impact from
the Tax Act may differ from this estimate, possibly materially, due to among other things, further refinement of FHN's calculations, changes in
interpretations and assumptions FHN has made, guidance that may be issued and actions FHN make take as a result of the Tax Act
• Net loss available to common shareholders was $52.8 million, or $.20 loss per diluted share in fourth quarter compared to net income available to common
shareholders of $67.3 million, or $.28 per diluted share in third quarter
• Net interest income ("NII") increased to $242.1 million in fourth quarter from $209.8 million in third quarter; Net Interest Margin ("NIM") increased to
3.27 percent in fourth quarter from 3.19 percent in prior quarter
• The increase in NII in fourth quarter was primarily driven by loan and deposit growth associated with the CBF acquisition, the positive impact of
higher market rates, and higher average balances of other commercial loans
• The increase in NIM was also largely the result of loan and deposit growth associated with the CBF acquisition
• Noninterest income (including securities gains) increased to $133.2 million in fourth quarter from $112.4 million in prior quarter
• Fourth quarter includes a $1.3 million gain related to BOLI policy benefits
• Third quarter includes a $14.3 million loss from the repurchase of equity securities previously included in a financing transaction
• Noninterest expense increased to $346.7 million in fourth quarter from $236.9 million in third quarter
• The expense increase was driven by a $38.5 million increase in acquisition-related expenses associated with the CBF acquisition, a $23.9 million
increase in loss accruals related to legal matters, $9.9 million of special bonuses, and a $5.6 million charitable contribution to the First Tennessee
Foundation, somewhat offset by $4.3 million of deferred compensation BOLI gains
• Provision for income taxes was $74.0 million and $13.6 million in the fourth and third quarters, respectively
• Fourth quarter increase was primarily associated with the effects of the Tax Act
• Period-end loans were $27.7 billion in fourth quarter and $20.2 billion in third quarter; average loans increased 13 percent to $22.5 billion in fourth quarter
• Period-end deposits were $30.6 billion and $22.1 billion in fourth and third quarter, respectively; average deposits increased 13 percent linked quarter to
$24.9 billion in fourth quarter
Regional Banking
• Pre-tax income increased to $126.5 million in fourth quarter from $114.7 million in third quarter; pre-provision net revenue was $136.2 million and $123.2
million in fourth and third quarter, respectively
• Period-end loans increased to $26.3 billion in fourth quarter from $18.8 billion in third quarter; average loans increased 15 percent to $21.1 billion in fourth
quarter
• The increase in period-end and average loans was primarily due to the addition of $7.4 billion in UPB of loans from the CBF acquisition.
• Period-end deposits were $27.6 billion and $20.1 billion in fourth and third quarter, respectively; average deposits increased 12 percent to $22.4 billion
• The increase in period-end and average deposits was primarily the result of $8.1 billion of deposits acquired in the CBF acquisition
• NII increased to $244.3 million in fourth quarter from $209.3 million in third quarter
• The increase in NII was largely due to loan and deposit growth associated with the CBF acquisition
• Provision expense was $9.7 million in fourth quarter compared to $8.6 million in the prior quarter
• Fourth quarter 2017 provision expense was primarily driven by a charge-off associated with a single larger credit resulting in fraud loss
• Noninterest income increased to $70.5 million in fourth quarter from $64.4 million in third quarter
• The increase in noninterest income was primarily due to higher fee income associated with deposit transactions and cash management and bankcard
income largely driven by the CBF acquisition
• Noninterest expense increased to $178.6 million in fourth quarter from $150.5 million in third quarter
• Fourth quarter expense includes $19.1 million attributable to CBF activities, including $10.7 million of personnel-related expenses associated with a
27 percent increase in headcount, and $4.1 million in special bonuses
• Third quarter expense includes $4.4 million of loss accruals related to legal matters associated with trust services

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