<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) -- April 14, 1997
FIRST TENNESSEE NATIONAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
TENNESSEE 0-4491 62-0803242
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
165 MADISON AVENUE
MEMPHIS, TENNESSEE 38103
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code -- (901) 523-4444
<PAGE> 2
ITEM 5. OTHER EVENTS.
On April 14, 1997 the Company announced earnings for the quarter ended
March 31, 1997. Please see the attached exhibit 99 for a press release of the
Company relating thereto.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
Exhibit Number Description
- ---------------------- ----------------------------------------------------
<S> <C>
99 Press Release, dated April 14, 1997, announcing
the Company's first quarter 1997 earnings.
</TABLE>
-2-
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FIRST TENNESSEE NATIONAL CORPORATION
Date: April 14, 1997 By: ELBERT L. THOMAS, JR.
--------------------------------------
Name: Elbert L. Thomas, Jr.
Title: Executive Vice President and
Chief Financial Officer
-3-
<PAGE> 1
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- ---------------------------------------------------------
<S> <C>
99 Press Release, dated April 14, 1997, announcing the
Company's first quarter 1997 earnings.
</TABLE>
-4-
<PAGE> 2
RELEASE: At close of market
DATE: April 14, 1997
Financial Information: Media Information: Investor Relations:
- ---------------------- ------------------ -------------------
Teresa Fehrman Kim Cherry Marty Mosby
(901) 523-4161 (901) 523-4726 (901) 523-5620
FIRST TENNESSEE REPORTS RECORD FIRST QUARTER EARNINGS
-----------------------------------------------------
MEMPHIS, Tenn.-- First Tennessee National Corporation (First
Tennessee) reported earnings per share for the first quarter of $.60, up 7
percent over last year's earnings per share of $.56, and net income of $38.6
million for the first quarter, up 3 percent from the previous year. For the
first quarter of 1997, return on average assets was 1.23 percent and return on
average common equity was 18.09 percent, compared with 1.22 percent and 17.27
percent, respectively, for first quarter 1996. Total assets were $13.0 billion
and shareholders' equity was $841.9 million at March 31, 1997.
"We are pleased to report a record first quarter of earnings with
strong profitability ratios," said Ralph Horn, chairman and chief executive
officer of First Tennessee. "Also during the quarter, we announced a new name
for our bond division -- First Tennessee Capital Markets. This new name
reflects our nationwide distribution network and the fact that we have become
a national leader in agency underwriting."
Noninterest income
- ------------------
Fee income (noninterest income excluding securities gains and losses)
contributed 55 percent to total revenue, but grew only 2 percent, primarily due
to a 27 percent decline in revenues from First Tennessee Capital Markets' record
1996 first quarter. That record level was due to a more favorable market
environment and stronger customer demand resulting from the benefit of
regulatory reclassifications of securities in late 1995. Total underwritings
during the first quarter of 1997 were approximately $6.0 billion.
Excluding First Tennessee Capital Markets' impact on noninterest
income, the growth in fee income was 10 percent.
Noninterest income in mortgage banking grew 10 percent from the first
quarter of 1996, primarily from mortgage servicing income as the servicing
portfolio grew 25 percent from $18.7 billion at the end of the first quarter of
1996 to $23.4 billion at the end of the first quarter of 1997. Mortgage loan
originations declined 32 percent from $2.8 billion in the first quarter of 1996
to $1.9 billion in the first quarter of 1997 primarily due to a reduction in
refinance activity.
Noninterest income from trust and investment management services rose
12 percent in the first quarter of 1997 over the first quarter of 1996 primarily
due to the performance of Highland Capital Management Corp. and sales of asset
management products.
Increased volumes led to the 16 percent increase in cardholder and
merchant processing (two divisions related to credit card) and the 10 percent
growth in deposit transactions and cash management from the first quarter of
1996.
2
<PAGE> 3
Net interest income
- -------------------
Net interest income increased 10 percent from the previous year, with
the net interest margin improving 30 basis points to 4.24 percent and average
earning assets increasing 2 percent. The increase in net interest margin came
from improvement in the retail/commercial bank's margin from 4.11 percent in the
first quarter of 1996 to 4.46 percent in the first quarter of 1997.
Approximately 16 basis points of the net interest margin improvement in the
retail/commercial bank was due to the expiration in May 1996 of amortization
expense of a basis swap.
Noninterest expense
- -------------------
Total noninterest expense increased 3 percent from the previous year.
Employee compensation, incentives and benefits (personnel expense), the largest
category, decreased 5 percent from the previous year primarily from reduced
volumes in First Tennessee Capital Markets and FT Mortgage Companies, both
commission-based businesses. The benefit of consolidating the mortgage
operations also reduced the growth in expenses this quarter.
As a result of a larger servicing portfolio, amortization expense of
mortgage servicing rights increased 15 percent. Excluding expenses in FT
Mortgage Companies and First Tennessee Capital Markets, expense growth between
the first quarters of 1996 and 1997 would have been 10 percent. Most of this
growth relates to personnel expense, expense associated with the qualifying
capital securities offering (see Capital Management section for more
information) and equipment rental and depreciation.
Average balance sheet growth
- ----------------------------
The growth in the average balance sheet includes overall loan growth of
6 percent from the previous year. Commercial and consumer loans both grew 6
percent. As a result of older loans paying down and new loans being securitized,
the permanent mortgage portfolio declined 8 percent. Loan growth over this
period was funded primarily with core deposits, which grew 4 percent. With the
reduction in mortgage originations, mortgage loans held for sale declined 28
percent.
Asset quality
- -------------
The ratio of net charge-offs to average loans was 0.44 percent for the
first quarter of 1997, an increase from first quarter 1996 levels but a decrease
from the fourth quarter of 1996. The ratio of allowance for loan losses to total
loans remained relatively flat to first quarter 1996 levels at 1.57 percent.
Nonperforming assets grew primarily from an increase in the number of
mortgage loans repurchased by mortgage banking during the first quarter of 1997
to correct loan file documentation in order to certify loan pools. This backlog
in the documentation and pool certification process occurred principally from
our consolidation of five mortgage banking operations concurrent with an
unanticipated higher level of loan originations last year. The higher level of
provision reflects our best estimate of the inherent losses from the increase in
nonperforming assets.
3
<PAGE> 4
Capital management
- ------------------
During the first quarter of 1997, First Tennessee issued $100 million
of 8.07 percent qualifying capital securities through First Tennessee Capital
I, a wholly owned Delaware trust. These capital securities qualify as Tier I
capital and are fully and unconditionally guaranteed by First Tennessee. Part
of the proceeds of this issue were used to purchase 1.9 million shares of
common stock under an accelerated repurchase program during the first quarter.
The total equity-to-assets ratio for the first quarter of 1997 was 7.52
percent, with the qualifying capital securities contributing approximately 74
basis points to this ratio.
General
- -------
First Tennessee, headquartered in Memphis, Tennessee, is a nationwide,
diversified financial services institution and is one of the 50 largest bank
holding companies in the United States in market capitalization. First
Tennessee's market capitalization was $2.7 billion at March 31, 1997. Banking
and other financial services are provided through the regional banking group and
three national lines of business: FT Mortgage Companies, First Tennessee Capital
Markets and transaction processing. Transaction processing has been expanded to
include credit card merchant processing, MONEY BELT (our automated teller
machine network), First Express (our nationwide check clearing operation), and
transaction-oriented cash management products. The corporation's common stock is
traded over-the-counter on the Nasdaq Stock Market's national market system
under the symbol FTEN. It is listed in the financial section of most newspapers
as FstTN Ntl and is included in the Standard & Poor's MidCap 400 index.
4
<PAGE> 5
FIRST TENNESSEE NATIONAL CORPORATION
STATEMENTS OF INCOME - QUARTERLY GROWTH
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Growth
March 31 Rate (%)
--------------------- --------
1997 1996
-------- --------
<S> <C> <C> <C>
PER SHARE DATA:
- ---------------
Net income:
Earnings per share $ .60 $ .56 7.14 +
Dividends declared $ .300 $ .265
SELECTED FINANCIAL RATIOS:
- --------------------------
Return on average assets 1.23% 1.22%
Return on capital* 16.31% 17.27%
Return on average common equity 18.09% 17.27%
<CAPTION>
Quarter Ended Growth
March 31 Rate (%)
--------------------- --------
SUMMARY STATEMENTS 1997 1996
OF INCOME (THOUSANDS) -------- --------
- ---------------------
<S> <C> <C> <C>
Interest income $222,326 $217,652 2.15 +
Less interest expense 106,817 112,274 4.86 -
-------- --------
Net interest income 115,509 105,378 9.61 +
Provision for loan losses 12,526 8,033 55.93 +
-------- --------
Net interest income after
provision for loan losses 102,983 97,345 5.79 +
Noninterest income:
Mortgage banking 64,187 58,119 10.44 +
Capital markets 20,465 28,121 27.23 -
Deposit transactions and
cash management 19,224 17,435 10.26 +
Cardholder and merchant
processing 11,273 9,760 15.50 +
Trust and investment managment 9,270 8,296 11.74 +
Securities gains/(losses) 29 258 88.76 -
Other income and commissions 14,628 14,588 .27 +
-------- --------
Total noninterest income 139,076 136,577 1.83 +
-------- --------
Adjusted gross income after
provision for loan losses 242,059 233,922 3.48 +
Noninterest expense:
Employee compensation,
incentives, and benefits 93,896 98,942 5.10 -
Occupancy, equipment rentals,
depreciation, and maintenance 19,821 17,450 13.59 +
Amortization of mortgage
servicing rights 8,835 7,699 14.76 +
Amortization of intangible assets 2,407 2,354 2.25 +
Deposit insurance premium 365 419 12.89 -
Other 55,002 48,722 12.89 +
-------- --------
Total noninterest expense 180,326 175,586 2.70 +
-------- --------
Income before income taxes 61,733 58,336 5.82 +
Applicable income taxes 23,170 20,895 10.89 +
-------- --------
Net income $ 38,563 $ 37,441 3.00 +
======== ========
Net interest income - FTE $116,646 $106,812 9.21 +
</TABLE>
* Net income/Total shareholders' equity plus Guaranteed preferred beneficial
interest in First Tennessee's subordinated debentures.
6
<PAGE> 6
FIRST TENNESSEE NATIONAL CORPORATION
STATEMENTS OF INCOME - QUARTERLY
(UNAUDITED)
<TABLE>
<CAPTION>
1Q97 4Q96 3Q96 2Q96 1Q96
-------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
- ---------------
Net income:
Earnings per share $ .60 $ .80 $ .69 $ .63 $ .56
Dividends declared $ .300 $ .300 $ .265 $ .265 $ .265
SELECTED FINANCIAL RATIOS:
- --------------------------
Return on average assets 1.23% 1.67% 1.47% 1.34% 1.22%
Return on capital* 16.31% 22.47% 20.71% 19.48% 17.27%
Return on average common equity 18.09% 22.47% 20.71% 19.48% 17.27%
<CAPTION>
1Q97 4Q96 3Q96 2Q96 1Q96
-------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SUMMARY STATEMENTS
OF INCOME (THOUSANDS)
- ---------------------
Interest income $222,326 $ 227,094 $225,777 $225,974 $217,652
Less interest expense 106,817 109,287 110,728 113,020 112,274
-------- --------- -------- -------- --------
Net interest income 115,509 117,807 115,049 112,954 105,378
Provision for loan losses 12,526 11,232 8,853 7,559 8,033
-------- --------- -------- -------- --------
Net interest income after
provision for loan losses 102,983 106,575 106,196 105,395 97,345
Noninterest income:
Mortgage banking 64,187 83,768 71,495 60,902 58,119
Capital markets 20,465 23,654 16,951 17,145 28,121
Deposit transactions and
cash management 19,224 20,792 20,141 19,860 17,435
Cardholder and merchant
processing 11,273 11,242 10,860 9,478 9,760
Trust and investment managment 9,270 9,223 8,727 8,458 8,296
Securities gains/(losses) 29 (3,035) 44 52 258
Other income and commissions 14,628 16,789 14,201 13,825 14,588
-------- --------- -------- -------- --------
Total noninterest income 139,076 162,433 142,419 129,720 136,577
-------- --------- -------- -------- --------
Adjusted gross income after
provision for loan losses 242,059 269,008 248,615 235,115 233,922
Noninterest expense:
Employee compensation,
incentives, and benefits 93,896 99,371 94,005 93,062 98,942
Occupancy, equipment rentals,
depreciation, and maintenance 19,821 19,524 18,617 18,345 17,450
Amortization of mortgage
servicing rights 8,835 7,507 6,669 4,166 7,699
Amortization of intangible assets 2,407 2,363 2,412 2,362 2,354
Deposit insurance premium 365 (13) 4,259 464 419
Other 55,002 57,239 48,950 49,598 48,722
-------- --------- -------- -------- --------
Total noninterest expense 180,326 185,991 174,912 167,997 175,586
-------- --------- -------- -------- --------
Income before income taxes 61,733 83,017 73,703 67,118 58,336
Applicable income taxes 23,170 29,695 26,906 24,771 20,895
-------- --------- -------- -------- --------
Net income $ 38,563 $ 53,322 $ 46,797 $ 42,347 $ 37,441
======== ========= ======== ======== ========
Net interest income - FTE $116,646 $ 119,115 $116,308 $114,377 $106,812
</TABLE>
* Net income/Total shareholders' equity plus Guaranteed preferred beneficial
interest in First Tennessee's subordinated debentures.
7
<PAGE> 7
FIRST TENNESSEE NATIONAL CORPORATION
AVERAGE STATEMENTS OF CONDITION - QUARTERLY GROWTH
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Growth
March 31 Rate (%)
--------------------------------- ---------
AVERAGE BALANCE
SHEET (thousands) 1997 1996
- ----------------- ----------- -----------
<S> <C> <C> <C>
Loans, net of unearned income:
Commercial $ 3,529,430 $ 3,323,008 6.21 +
Consumer 2,699,853 2,543,724 6.14 +
Permanent mortgage 630,309 681,744 7.54 -
Credit card receivables 544,726 516,868 5.39 +
Real estate construction 299,246 246,345 21.47 +
Nonaccrual - Regional
Banking Group 12,124 10,135 19.63 +
Nonaccrual - Repurchased,
mortgage loans 27,481 5,394 409.47 +
----------- -----------
Total loans, net of
unearned income 7,743,169 7,327,218 5.68 +
Investment securities 2,202,804 2,130,562 3.39 +
Mortgage loans held for sale 768,760 1,063,895 27.74 -
Other earning assets 337,719 343,272 1.62 -
----------- -----------
Total earning assets 11,052,452 10,864,947 1.73 +
Cash and due from banks 697,702 666,518 4.68 +
Other assets 1,009,381 781,475 29.16 +
----------- -----------
Total assets $12,759,535 $12,312,940 3.63 +
=========== ===========
Certificates of deposits under
$100,000 and other time $ 2,861,187 $ 2,859,668 .05 +
Other interest-bearing deposits 3,577,002 3,281,433 9.01 +
----------- -----------
Total interest-bearing
core deposits 6,438,189 6,141,101 4.84 +
Certificates of deposits $100,000
and more 775,718 716,979 8.19 +
Short-term borrowed funds 2,095,777 2,081,777 .67 +
Term borrowings 209,305 259,141 19.23 -
----------- -----------
Total interest-bearing
liabilities 9,518,989 9,198,998 3.48 +
Demand deposits 1,856,628 1,854,471 .12 +
Other liabilities 425,014 387,458 9.69 +
Qualifying capital securities* 94,444 - N/A
Shareholders' equity 864,460 872,013 .87 -
----------- -----------
Total liabilities and
shareholders' equity $12,759,535 $12,312,940 3.63 +
=========== ===========
</TABLE>
*Guaranteed preferred beneficial interests in First Tennessee's subordinated
debentures
9
<PAGE> 8
FIRST TENNESSEE NATIONAL CORPORATION
AVERAGE STATEMENTS OF CONDITION - QUARTERLY
(Unaudited)
<TABLE>
<CAPTION>
1Q97 4Q96 3Q96 2Q96 1Q96
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
AVERAGE BALANCE
SHEET (thousands)
- -----------------
Loans, net of unearned income:
Commercial $ 3,529,430 $ 3,482,527 $ 3,392,149 $ 3,335,006 $ 3,323,008
Consumer 2,699,853 2,669,872 2,630,614 2,584,850 2,543,724
Permanent mortgage 630,309 642,094 652,710 663,753 681,744
Credit card receivables 544,726 542,211 538,510 523,043 516,868
Real estate construction 299,246 300,322 288,855 264,615 246,345
Nonaccrual - Regional
Banking Group 12,124 11,993 9,570 8,628 10,135
Nonaccrual - Repurchased,
mortgage loans 27,481 7,041 5,640 4,632 5,394
----------- ----------- ----------- ----------- -----------
Total loans, net of
unearned income 7,743,169 7,656,060 7,518,048 7,384,527 7,327,218
Investment securities 2,202,804 2,268,953 2,199,210 2,213,470 2,130,562
Mortgage loans held for sale 768,760 874,172 1,089,101 1,212,254 1,063,895
Other earning assets 337,719 273,159 293,791 399,737 343,272
----------- ----------- ----------- ----------- -----------
Total earning assets 11,052,452 11,072,344 11,100,150 11,209,988 10,864,947
Cash and due from banks 697,702 675,272 645,781 663,744 666,518
Other assets 1,009,381 958,353 879,721 833,058 781,475
----------- ----------- ----------- ----------- -----------
Total assets $12,759,535 $12,705,969 $12,625,652 $12,706,790 $12,312,940
=========== =========== =========== =========== ===========
Certificates of deposits under
$100,000 and other time $ 2,861,187 $ 2,891,124 $ 2,905,366 $ 2,884,512 $ 2,859,668
Other interest-bearing deposits 3,577,002 3,489,933 3,446,259 3,414,895 3,281,433
----------- ----------- ----------- ----------- -----------
Total interest-bearing
core deposits 6,438,189 6,381,057 6,351,625 6,299,407 6,141,101
Certificates of deposits $100,000
and more 775,718 834,411 861,729 929,749 716,979
Short-term borrowed funds 2,095,777 2,050,952 2,140,398 2,159,860 2,081,777
Term borrowings 209,305 241,405 256,451 257,768 259,141
----------- ----------- ----------- ----------- -----------
Total interest-bearing
liabilities 9,518,989 9,507,825 9,610,203 9,646,784 9,198,998
Demand deposits 1,856,628 1,847,351 1,750,140 1,812,756 1,854,471
Other liabilities 425,014 406,896 366,369 372,823 387,458
Qualifying capital securities* 94,444 -- -- -- --
Shareholders' equity 864,460 943,897 898,940 874,427 872,013
----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $12,759,535 $12,705,969 $12,625,652 $12,706,790 $12,312,940
=========== =========== =========== =========== ===========
Average shares outstanding 64,582,657 67,117,011 67,144,391 67,224,935 67,301,454
</TABLE>
*Guaranteed preferred beneficial interests in First Tennessee's subordinated
debentures
10
<PAGE> 9
FIRST TENNESSEE NATIONAL CORPORATION
PERIOD-END STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31
-------------------------------------- Growth
1997 1996 Rate(%)
PERIOD-END BALANCE ----------- ----------- ---------
SHEET (THOUSANDS)
- ------------------
<S> <C> <C> <C>
Loans, net of unearned income:
Commercial $ 3,558,389 $ 3,316,086 7.31 +
Consumer 2,710,766 2,563,818 5.73 +
Permanent mortgage 636,384 673,104 5.46 -
Credit card receivables 529,197 514,277 2.90 +
Real estate construction 287,266 244,975 17.26 +
Nonaccrual - Regional
Banking Group 12,706 8,015 58.53 +
Nonaccrual - Repurchased,
mortgage loans 30,016 4,969 504.07 +
----------- -----------
Total loans, net of
unearned income 7,764,724 7,325,244 6.00 +
Investment securities 2,200,779 2,235,349 1.55 -
Mortgage loans held for sale 698,800 1,138,871 38.64 -
Other earning assets 522,379 411,903 26.82 +
----------- -----------
Total earning assets 11,186,682 11,111,367 .68 +
Cash and due from banks 525,059 658,101 20.22 -
Other assets 1,263,772 1,048,964 20.48 +
----------- -----------
Total assets $12,975,513 $12,818,432 1.23 +
=========== ===========
Certificates of deposits under
$100,000 and other time $ 2,837,555 $ 2,843,388 .21 -
Other interest-bearing deposits 3,633,025 3,366,948 7.90 +
Certificates of deposits $100,000
and more 838,222 718,224 16.71 +
Short-term borrowed funds 1,912,346 2,119,767 9.79 -
Term borrowings 208,269 258,633 19.47 -
----------- -----------
Total interest-bearing
liabilities 9,429,417 9,306,960 1.32 +
Demand deposits 1,882,416 1,824,027 3.20 +
Other liabilities 721,818 804,464 10.27 -
Qualifying capital securities* 100,000 - N/A
Shareholders' equity 841,862 882,981 4.66 -
----------- -----------
Total liabilities and
shareholders' equity $12,975,513 $12,818,432 1.23 +
=========== ===========
</TABLE>
*Guaranteed preferred beneficial interests in First Tennessee's subordinated
debentures
11
<PAGE> 10
FIRST TENNESSEE NATIONAL CORPORATION
ASSET QUALITY HIGHLIGHTS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSET QUALITY
- -------------
1Q97 4Q96 3Q96 2Q96 1Q96
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES:
Beginning Reserve $ 117,748 $ 117,717 $ 116,478 $ 114,631 $ 112,567
Provision 12,526 11,232 8,853 7,559 8,033
Charge-offs (10,653) (13,631) (10,742) (9,159) (8,850)
Loan recoveries 2,067 2,430 3,128 3,447 2,881
--------- --------- --------- --------- ---------
Ending Balance $ 121,688 $ 117,748 $ 117,717 $ 116,478 $ 114,631
========= ========= ========= ========= =========
NONPERFORMING ASSETS:
Nonperforming loans $ 12,706 $ 9,978 $ 12,390 $ 9,730 $ 8,015
Foreclosed real estate 5,807 5,137 3,667 5,334 10,561
Other assets 194 196 203 925 966
--------- --------- --------- --------- ---------
Total Regional Banking Group $ 18,707 $ 15,311 $ 16,260 $ 15,989 $ 19,542
--------- --------- --------- --------- ---------
Mortgage Banking nonperforming
loans 30,016 8,948 6,217 4,606 4,969
Mortgage Banking foreclosed
real estate 8,824 2,686 3,392 3,380 2,654
--------- --------- --------- --------- ---------
Total nonperforming assets $ 57,547 $ 26,945 $ 25,869 $ 23,975 $ 27,165
========= ========= ========= ========= =========
Loans and leases past due 90
days or more $ 36,133 $ 30,747 $ 32,424 $ 32,157 $ 33,264
</TABLE>
12
<PAGE> 11
FIRST TENNESSEE NATIONAL CORPORATION
ASSET QUALITY HIGHLIGHTS
(Unaudited)
<TABLE>
<CAPTION>
1Q97 4Q96 3Q96 2Q96 1Q96
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
ASSET QUALITY RATIOS - TOTAL FIRST TENNESSEE
Nonperforming loans to total loans
(net of unearned income) .55% .24% .24% .19% .18%
Nonperforming assets to total loans
(net of unearned income) plus
foreclosed real estate and
other assets .74% .35% .34% .32% .37%
Allowance for loan losses to total loans 1.57% 1.52% 1.54% 1.56% 1.56%
Allowance for loan losses to
nonperforming loans 284.84% 622.15% 632.65% 812.49% 882.86%
Allowance for loan losses to
nonperforming assets 211.46% 436.99% 455.05% 485.83% 421.98%
Net charge-offs to average loans .44% .59% .41% .31% .33%
ASSET QUALITY RATIOS - REGIONAL BANKING GROUP
Nonperforming loans to total loans
(net of unearned income) .16% .13% .16% .13% .11%
Nonperforming assets to total loans
(net of unearned income) plus
foreclosed real estate and
other assets .24% .20% .21% .21% .27%
Allowance for loan losses to total loans 1.51% 1.52% 1.53% 1.55% 1.56%
Allowance for loan losses to
nonperforming loans 918.90% 1,172.18% 943.98% 1,189.31% 1,420.75%
Allowance for loan losses to
nonperforming assets 624.13% 763.90% 719.31% 723.75% 582.71%
</TABLE>
13
<PAGE> 12
FIRST TENNESSEE NATIONAL CORPORATION
CAPITAL AND MARGIN HIGHLIGHTS
(Unaudited)
CAPITAL ADEQUACY:
- -----------------
<TABLE>
<CAPTION>
1Q97 4Q96 3Q96 2Q96 1Q96
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Tier 1 Capital* $ 860,643 $ 856,769 $ 837,091 $ 803,839 $ 786,839
Tier 2 Capital* 268,328 266,864 263,594 263,537 262,323
---------- ---------- ---------- ---------- ----------
Total Capital* $1,128,971 $1,123,633 $1,100,685 $1,067,376 $1,049,162
========== ========== ========== ========== ==========
Risk-Adjusted Assets* $9,531,492 $9,515,107 $9,158,018 $9,157,648 $9,064,140
Tier 1 Ratio* 9.03% 9.00% 9.14% 8.78% 8.68%
Tier 2 Ratio* 2.81% 2.81% 2.88% 2.88% 2.89%
---------- ---------- ---------- ---------- ----------
Total Capital Ratio* 11.84% 11.81% 12.02% 11.66% 11.57%
========== ========== ========== ========== ==========
Leverage Ratio* 6.79% 6.80% 6.67% 6.37% 6.45%
Common Equity/Asset
Ratio (average) 6.78% 7.43% 7.12% 6.88% 7.08%
Total Equity**/Assets
Ratio (average) 7.52% 7.43% 7.12% 6.88% 7.08%
Book Value $ 13.17 $ 14.28 $ 13.78 $ 13.29 $ 13.10
</TABLE>
* Current quarter is an estimate.
**Total equity includes shareholders' equity and Guaranteed preferred
beneficial interests in First Tennessee's subordinated debentures.
NET INTEREST MARGIN
- -------------------
<TABLE>
<CAPTION>
1Q97 4Q96 3Q96 2Q96 1Q96
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Yield on earning assets 8.06 % 8.14 % 8.06 % 8.04 % 7.99 %
Rates paid on interest-
bearing liabilities 4.51 % 4.55 % 4.57 % 4.69 % 4.87 %
---------- ---------- ---------- ---------- ----------
Net interest spread 3.55 % 3.59 % 3.49 % 3.35 % 3.12 %
Effect of interest-free sources .63 % .64 % .61 % .66 % .75 %
Loan fees .09 % .09 % .09 % .10 % .11 %
FRB interest and penalties (.03)% (.02)% (.01)% (.02)% (.04)%
---------- ---------- ---------- ---------- ----------
Net interest margin 4.24 % 4.30 % 4.18 % 4.09 % 3.94 %
========== ========== ========== ========== ==========
</TABLE>
14
<PAGE> 13
FIRST TENNESSEE NATIONAL CORPORATION
REGIONAL BANKING GROUP HIGHLIGHTS
(DOLLARS IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
1Q97 4Q96 3Q96 2Q96 1Q96
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
REGIONAL BANKING GROUP
- ----------------------
Total Revenues $ 146,261 $ 148,933 $ 141,614 $ 138,748 $ 130,796
Loan Loss Provision 8,430 10,919 8,853 7,559 8,033
Operating Expenses 85,821 84,946 81,008 79,234 77,713
---------- ---------- ---------- ---------- ----------
PRE-TAX INCOME $ 52,010 $ 53,068 $ 51,753 $ 51,955 $ 45,050
RETAIL/COMMERCIAL BANK
----------------------
Total Revenues $ 121,718 $ 124,896 $ 118,014 $ 115,596 $ 106,818
Loan Loss Provision 1,963 4,583 3,234 2,039 3,434
Operating Expenses 73,386 73,242 69,793 67,564 66,169
---------- ---------- ---------- ---------- ----------
Pre-Tax Income $ 46,369 $ 47,071 $ 44,987 $ 45,993 $ 37,215
CREDIT CARD
-----------
Total Revenues $ 15,170 $ 14,715 $ 14,769 $ 14,546 $ 15,352
Loan Loss Provision 6,467 6,336 5,619 5,520 4,599
Operating Expenses 5,811 5,127 4,746 5,317 5,356
---------- ---------- ---------- ---------- ----------
Pre-Tax Income $ 2,892 $ 3,252 $ 4,404 $ 3,709 $ 5,397
KEY STATISTICS:
Outstandings $ 529,197 $ 564,802 $ 537,034 $ 534,784 $ 514,277
Annualized Net Charge-offs/
Average Loans 4.59% 4.46% 3.94% 3.98% 3.32%
TRUST SERVICES
--------------
Total Revenues $ 9,373 $ 9,322 $ 8,831 $ 8,606 $ 8,626
Operating Expenses 6,624 6,577 6,469 6,353 6,188
---------- ---------- ---------- ---------- ----------
Pre-Tax Income $ 2,749 $ 2,745 $ 2,362 $ 2,253 $ 2,438
KEY STATISTICS:
Managed Assets (FTBNA) $5,699,100 $5,657,171 $5,423,824 $5,333,677 $5,251,956
</TABLE>
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.
15
<PAGE> 14
FIRST TENNESSEE NATIONAL CORPORATION
NATIONAL BUSINESS LINES HIGHLIGHTS
(DOLLARS IN THOUSANDS, UNAUDITED)
<TABLE>
<CAPTION>
1Q97 4Q96 3Q96 2Q96 1Q96
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
MORTGAGE BANKING
- ----------------
Total Revenues $ 70,470 $ 93,443 $ 82,482 $ 70,825 $ 65,451
Loan Loss Provision 4,096 313 - - -
Operating Expenses 62,284 69,745 63,004 60,987 62,258
----------- ----------- ----------- ----------- ------------
PRE-TAX INCOME $ 4,090 $ 23,385 $ 19,478 $ 9,838 $ 3,193
KEY STATISTICS:
Origination Volume $ 1,949,526 $ 2,378,802 $ 2,433,067 $ 2,771,878 $ 2,812,395
Servicing Portfolio $23,383,506 $22,288,031 $21,698,381 $20,491,292 $ 18,702,089
CAPITAL MARKETS
- ---------------
Total Revenues $ 21,076 $ 24,717 $ 17,618 $ 18,517 $ 29,261
Operating Expenses 16,084 17,352 13,739 14,514 21,098
----------- ----------- ----------- ----------- ------------
PRE-TAX INCOME $ 4,992 $ 7,365 $ 3,879 $ 4,003 $ 8,163
KEY STATISTICS:
Total Securities
Bought/Sold $47,258,846 $54,534,714 $43,640,882 $55,118,434 $ 64,477,222
Total Underwritings $ 6,028,000 $ 6,723,000 $ 3,691,000 $ 6,992,000 $ 12,601,000
TRANSACTION PROCESSING
- ----------------------
Total Revenues $ 17,525 $ 17,492 $ 16,967 $ 15,953 $ 16,954
Operating Expenses 14,108 13,948 13,339 13,260 14,517
----------- ----------- ----------- ----------- ------------
PRE-TAX INCOME $ 3,417 $ 3,544 $ 3,628 $ 2,693 $ 2,437
KEY STATISTICS:
Merchant Transactions
Processed 26,988,136 27,899,716 29,305,213 27,882,205 24,495,647
MONEY BELT Transactions
Processed (correspondent) 4,446,592 4,417,275 4,428,613 4,233,942 3,745,782
First Express Transactions
Processed 90,671,569 91,229,168 93,155,912 96,412,243 108,527,771
</TABLE>
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.
16
