<PAGE> 1
EXHIBIT 99
(FIRST TENNESSEE LOGO)
NEWS RELEASE
RELEASE: Immediate
DATE: July 18, 2000
<TABLE>
<CAPTION>
Financial Information: Media Information: Investor Relations:
---------------------- ------------------ -------------------
<S> <C> <C>
Teresa Rosengarten Kim Cherry Marty Mosby
(901) 523-4161 (901) 523-4726 (901) 523-5620
</TABLE>
FIRST TENNESSEE REPORTS SECOND QUARTER EARNINGS
MEMPHIS, TENN. -- First Tennessee National Corporation (First Tennessee)
announced today second quarter earnings of $55.4 million or $.42 diluted
earnings per share. This compares with last year's second quarter earnings of
$61.0 million or $.45 diluted earnings per share. Return on average
shareholders' equity was 17.4 percent and return on average assets was 1.14
percent for the second quarter of 2000, compared with 20.9 percent and 1.33
percent, respectively, for the same period in 1999. Total assets were $19.8
billion and shareholders' equity was $1.3 billion at June 30, 2000. At June 30,
1999, total assets were $18.6 billion and shareholders' equity was $1.2 billion.
For the first six months of 2000, net income totaled $94.9 million, or $.72 per
diluted share, compared with $114.0 million, or $.85 per diluted share, in the
first six months of 1999. Return on average shareholders' equity for the first
half of 2000 was 15.2 percent and return on average assets was .99 percent
compared with 20.0 percent and 1.24 percent, respectively, for the same period
in 1999.
"The current business environment, including recent interest rate increases and
the expectation for more, has continued to negatively affect the revenues from
two of our business lines -- mortgage banking and capital markets -- which has
only been partially offset by the performance of our other businesses," said
Ralph Horn, chairman and chief executive officer of First Tennessee. "Contrary
to our initial expectations, these market developments are
<PAGE> 2
extending into the third quarter, and if prolonged into the remainder of the
year will continue to negatively affect our earnings. However, we continue to
evaluate opportunities to enhance our profitability and I remain encouraged by
the commitment and execution of our employees in this unfavorable environment."
INCOME STATEMENT
Total revenues declined 9 percent from the second quarter of 1999, with a
decline in fee income (noninterest income excluding securities gains and losses)
of 15 percent and an increase in net interest income of 4 percent. In the second
quarter of 2000, fee income contributed approximately 62 percent to total
revenues compared with approximately 67 percent for the same period in 1999. For
the first six months of 2000, total revenues declined 12 percent over the
previous year, primarily due to a 19 percent decline in fee income. Fee income
contributed approximately 61 percent to total revenues compared with 66 percent
in 1999.
NONINTEREST INCOME
Fee income was $250.7 million for the second quarter of 2000 compared with
$294.3 million for the same period in 1999. For the six-month comparison, fee
income was $471.5 million in 2000 compared with $580.9 million in 1999. A
discussion of major line items follows.
Mortgage banking
Fee income in First Horizon Home Loans (mortgage banking) for the second quarter
of 2000 was $134.2 million, a decline of 24 percent from the $175.7 million
earned in the same period one year ago. Mortgage banking fee income consists of
various revenue streams from the origination process, servicing, and other
activities such as sales of servicing.
Origination activity fell 24 percent (from $5.6 billion to $4.3 billion) due to
the rise in interest rates and competitive pricing pressures which have been in
progress for the past several quarters. Mortgage rates in the second quarter of
2000 were at least 1 percentage point higher than the same period one year ago.
More importantly, mortgage rates in the second quarter of 2000 were
substantially higher than the average rates on existing mortgage loans, making
it economically impractical for customers to refinance. As a result, the decline
in origination volume came from lower refinance volume. Fees from the mortgage
origination process (origination fees, profits from the sale of loans and
secondary marketing activities) declined 45
<PAGE> 3
percent from the second quarter of 1999 (from $116.3 million to $63.5 million).
This decline came from fewer loans sold into the secondary market due to less
production and a smaller beginning warehouse, lower margins related to
competitive pricing pressures and a shift in product mix, and losses of
approximately $4 million on certain loans affected by the volatility of interest
rate movements.
At June 30, 2000, the servicing portfolio totaled $45.8 billion compared with
$44.3 billion at June 30, 1999. Servicing fees for the second quarter of 2000
were $38.6 million compared with $43.7 million for the same period in 1999. The
lower level of fees was due to the classification of excess mortgage servicing
rights to "interest-only" strips held in the investment securities portfolio and
the portfolio's lower weighted average service fee due to change in mix driven
by prior period bulk sales. Bulk servicing sales of only $.3 billion were
transacted in the second quarter of 2000, compared with $1.9 billion in the
second quarter of 1999. In addition, approximately $.5 billion of bulk servicing
was purchased during the second quarter of 2000, compared with no purchases in
the same period in 1999.
For the second quarter of 2000 miscellaneous mortgage income totaled $32.3
million which included the $40.9 million gain from the sale of the HomeBanc
Mortgage division, net of recognizing $13.9 million of losses on hedge
instruments associated with the mortgage servicing rights portfolio.
Miscellaneous mortgage income was $12.0 million in the second quarter of 1999.
For the first six months of 2000, mortgage banking noninterest income was $234.1
million compared with $344.5 million for the same period in 1999.
Capital markets
The increase in interest rates also negatively impacted First Tennessee Capital
Markets, which produced fee income of $18.9 million during the second quarter of
2000 compared with $30.2 million during the second quarter of 1999. Activity
levels continued to grow as customers, primarily nondepository, invested
principally in short-term securities. For the first six months of 2000, capital
markets fee income was $43.3 million compared with $74.6 million for the same
period in 1999.
<PAGE> 4
Other fee income
For the second quarter of 2000, deposit transactions and cash management fees
grew 12 percent from $26.6 million to $29.7 million. Merchant processing fee
income growth was affected by a special assessment received from a large
customer in the second quarter of 1999, thus leading to a decline in fee income
of 13 percent (from $14.2 million in the second quarter of 1999 to $12.3 million
in the second quarter of 2000). Cardholder fees increased 15 percent, from $6.1
million to $7.0 million, from higher interchange collections and price
increases. Trust services and investment management fees grew 9 percent from
$14.8 million to $16.1 million, and assets under management grew 4 percent.
Other income and commissions grew 22 percent from $26.7 million to $32.5
million, with more than half of the growth related to remittance processing
fees.
For the first six months of 2000, fees from deposit transactions and cash
management increased 13 percent, merchant processing fees declined 6 percent,
cardholder fees increased 27 percent, trust and investment management fees
increased 9 percent and other income and commissions increased 47 percent. The
reasons for these year-to-date trends are similar to the quarterly trends
discussed above.
NET INTEREST INCOME
Net interest income (on a fully taxable equivalent basis) increased 4 percent
from $147.1 million in the second quarter of 1999 to $152.5 million in the
second quarter of 2000 due primarily to the 5 percent increase in earning
assets. The consolidated net interest margin (margin) decreased to 3.74 percent
for the second quarter of 2000 from 3.81 percent for the same period in 1999,
primarily as a result of higher funding costs. The regional banking group's
margin declined from 4.98 percent in the second quarter of 1999 to 4.89 percent
for the second quarter of 2000.
For the first six months of 2000, net interest income was relatively flat at
$298.7 million compared with $296.1 million for the same period in 1999. For
this same period, earning assets increased 2 percent. The year-to-date
consolidated net interest margin was 3.74 percent compared with 3.78 percent for
the same period in 1999.
<PAGE> 5
NONINTEREST EXPENSE
Total noninterest expense (operating expense) decreased 9 percent from $330.7
million for the second quarter of 1999 to $301.7 million for the second quarter
of 2000. Employee compensation, incentives and benefits (personnel expense), the
largest component of noninterest expense, decreased 10 percent. The percentage
change in personnel and total operating expense is affected by activity levels
and product mix in mortgage banking and capital markets. The rate of change in
total operating expense from year to year was also affected by the inclusion of
a full quarter of expense related to the remittance processing function compared
with only one month of expense the previous year and lease abandonment costs,
fixed asset writeoffs, and severance packages primarily in mortgage banking.
With the increase in interest rates and lower prepayments, amortization of
mortgage servicing rights declined 40 percent. Other expenses declined 8 percent
primarily from the slowdown in mortgage banking activity.
For the first six months of 2000, operating expenses decreased 11 percent and
personnel expense decreased 15 percent. Amortization of mortgage servicing
rights decreased 40 percent for the six-month period and other expenses,
principally related to mortgage banking, decreased 5 percent.
AVERAGE BALANCE SHEET
For the second quarter of 2000, total average assets increased 6 percent to
$19.6 billion. Total loans grew 14 percent, with the majority of the growth
coming from consumer loans which were up 19 percent and commercial loans which
were up 9 percent. Mortgage loans held for sale declined 9 percent.
Interest-bearing core deposits and total core deposits declined 4 percent and 2
percent, respectively, while purchased funds increased 18 percent during this
same period. Average shareholders' equity increased 9 percent from the second
quarter of 1999.
ASSET QUALITY
The provision for loan losses increased $2.1 million from the second quarter of
1999 due to inherent risk in the loan portfolio and loan growth. An analytical
model is used based on historical loss experience, current trends, and
reasonably foreseeable events to determine the amount of provision to be
recognized and to test the adequacy of the loan loss allowance. The allowance
for loan losses to total loans at June 30, 2000, was 1.44 percent. The ratio of
nonperforming assets to total loans was .45 percent and the ratio of net
charge-offs to average
<PAGE> 6
loans was .52 percent for the second quarter of 2000 compared with .53 percent
and .65 percent, respectively, for the same period in 1999.
Forward-Looking Information
This press release contains forward-looking statements involving significant
risks and uncertainties. A number of important factors could cause actual
results to differ materially from those in the forward-looking information.
Those factors include general economic and financial market conditions,
including expectations of the timing and amount of interest rate movements,
competition, ability to execute business plans, items already mentioned in this
press release, and other factors described in our recent filings with the
Securities and Exchange Commission. First Tennessee disclaims any obligation to
update any such factors or to publicly announce the result of any revisions to
any of the forward-looking statements included herein to reflect future events
or developments.
(See accompanying tables for additional information)
GENERAL INFORMATION
Description
- First Tennessee is a nationwide, diversified financial services
institution.
- One of the 50 largest bank holding companies in the United States 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 -
- First Horizon Home Loans (formerly FT Mortgage Companies)
- First Tennessee Capital Markets
- Transaction processing includes First Horizon Merchant
Services (credit card merchant processing), MONEYBELT
(automated teller machine network), and Express Processing
(nationwide payment processing operation)
Stock Information
- Our common stock is traded on the New York Stock Exchange under the
symbol FTN
- Listed in most newspapers as FstTN Ntl
- Included in the Standard and Poor's MidCap 400 Index
<PAGE> 7
FIRST TENNESSEE NATIONAL CORPORATION
PER SHARE DATA AND FINANCIAL RATIOS
(Unaudited)
<TABLE>
<CAPTION>
Year-to-date
June 30
--------------- Growth
2000 1999 Rate (%)
---- ---- --------
<S> <C> <C> <C>
PER SHARE DATA:
---------------
Diluted earnings per share $.72 $.85 15.3 -
Dividends declared .44 .38
SELECTED FINANCIAL RATIOS:
--------------------------
Return on average assets .99% 1.24%
Return on average shareholders' equity 15.2 20.0
<CAPTION>
Quarter Ended
June 30
--------------- Growth
2000 1999 Rate (%)
---- ---- --------
<S> <C> <C> <C>
PER SHARE DATA:
---------------
Diluted earnings per share $.42 $.45 6.7 -
Dividends declared .22 .19
SELECTED FINANCIAL RATIOS:
--------------------------
Return on average assets 1.14% 1.33%
Return on average shareholders' equity 17.4 20.9
</TABLE>
QUARTERLY INFORMATION
<TABLE>
<CAPTION>
2Q00 1Q00 4Q99 3Q99 2Q99
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
---------------
Diluted earnings per share $ .42 $ .30 $ .48 $ .52 $ .45
Dividends declared .22 .22 .22 .19 .19
SELECTED FINANCIAL RATIOS:
--------------------------
Return on average assets 1.14% .84% 1.35% 1.48% 1.33%
Return on average shareholders'
equity 17.4 13.0 20.7 22.6 20.9
</TABLE>
T-1
<PAGE> 8
FIRST TENNESSEE NATIONAL CORPORATION
STATEMENTS OF INCOME - QUARTERLY GROWTH
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
June 30
------------------------ Growth
(THOUSANDS) 2000 1999 Rate (%)
----------- -------- -------- --------
<S> <C> <C> <C>
Interest income $344,119 $293,177 17.4 +
Less interest expense 192,263 146,811 31.0 +
-------- --------
Net interest income 151,856 146,366 3.8 +
Provision for loan losses 17,077 14,979 14.0 +
-------- --------
Net interest income after
provision for loan
losses 134,779 131,387 2.6 +
Noninterest income:
Mortgage banking 134,196 175,696 23.6 --
Capital markets 18,973 30,177 37.1 --
Deposit transactions and
cash management 29,731 26,608 11.7 +
Trust and investment
management 16,058 14,753 8.8 +
Merchant processing 12,310 14,216 13.4 --
Cardholder fees 6,942 6,052 14.7 +
Securities gains/(losses) 84 (38) N/A
Other income and
commissions 32,532 26,757 21.6 +
-------- --------
Total noninterest income 250,826 294,221 14.7 --
-------- --------
Adjusted gross income
after provision for
loan losses 385,605 425,608 9.4 --
Noninterest expense:
Employee compensation,
incentives and
benefits 146,201 162,391 10.0 --
Occupancy, equipment
rentals, depreciation,
and maintenance 37,758 30,695 23.0 +
Amortization of mortgage
servicing rights 17,954 29,937 40.0 --
Amortization of intangible
assets 2,666 2,601 2.5 +
Other 97,074 105,067 7.6 --
-------- --------
Total noninterest expense 301,653 330,691 8.8 --
-------- --------
Income before income
taxes 83,952 94,917 11.6 --
Applicable income taxes 28,529 33,945 16.0 --
-------- --------
Net income $ 55,423 $ 60,972 9.1 --
======== ========
Net interest income - FTE $152,509 $147,118 3.7 +
</TABLE>
T-2
<PAGE> 9
FIRST TENNESSEE NATIONAL CORPORATION
STATEMENTS OF INCOME - YEARLY GROWTH
(Unaudited)
<TABLE>
<CAPTION>
Year-to-date
June 30
-------------------------- Growth
(THOUSANDS) 2000 1999 Rate (%)
----------- ---------- ---------- --------
<S> <C> <C> <C>
Interest income $ 663,418 $ 593,443 11.8 +
Less interest expense 366,068 298,910 22.5 +
--------- ---------
Net interest income 297,350 294,533 1.0 +
Provision for loan losses 32,574 29,805 9.3 +
--------- ---------
Net interest income after
provision for loan
losses 264,776 264,728 -
Noninterest income:
Mortgage banking 234,068 344,474 32.1 --
Capital markets 43,337 74,565 41.9 --
Deposit transactions and
cash management 56,144 49,824 12.7 +
Trust and investment
management 32,052 29,344 9.2 +
Merchant processing 23,340 24,925 6.4 --
Cardholder fees 13,975 11,014 26.9 +
Securities gains/(losses) 1,685 (72) N/A
Other income and
commissions 68,622 46,710 46.9 +
--------- ---------
Total noninterest income 473,223 580,784 18.5 --
--------- ---------
Adjusted gross income
after provision for
loan losses 737,999 845,512 12.7 --
Noninterest expense:
Employee compensation,
incentives and
benefits 286,195 336,286 14.9 --
Occupancy, equipment
rentals, depreciation,
and maintenance 71,623 59,815 19.7 +
Amortization of mortgage
servicing rights 36,383 60,835 40.2 --
Amortization of intangible
assets 5,337 5,177 3.1 +
Other 194,994 205,375 5.1 --
--------- ---------
Total noninterest expense 594,532 667,488 10.9 --
--------- ---------
Income before income
taxes 143,467 178,024 19.4 --
Applicable income taxes 48,521 64,023 24.2 --
--------- ---------
Net income $ 94,946 $ 114,001 16.7 --
========= =========
Net interest income - FTE $ 298,652 $ 296,056 .9 +
</TABLE>
T-3
<PAGE> 10
FIRST TENNESSEE NATIONAL CORPORATION
STATEMENTS OF INCOME - QUARTERLY
(Unaudited)
<TABLE>
<CAPTION>
(THOUSANDS) 2Q00 1Q00 4Q99 3Q99 2Q99
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest income $ 344,119 $ 319,299 $ 310,509 $ 303,212 $ 293,177
Less interest expense 192,263 173,805 162,859 155,885 146,811
--------- --------- --------- --------- ---------
Net interest income 151,856 145,494 147,650 147,327 146,366
Provision for loan
losses 17,077 15,497 14,008 14,110 14,979
--------- --------- --------- --------- ---------
Net interest income after
provision for loan
losses 134,779 129,997 133,642 133,217 131,387
Noninterest income:
Mortgage banking 134,196 99,872 129,378 158,919 175,696
Capital markets 18,973 24,364 24,438 27,832 30,177
Deposit transactions
and cash management 29,731 26,413 28,985 27,431 26,608
Trust and investment
management 16,058 15,994 14,748 15,715 14,753
Merchant processing 12,310 11,030 11,906 12,880 14,216
Cardholder fees 6,942 7,033 7,481 7,084 6,052
Securities gains/
(losses) 84 1,601 470 1,859 (38)
Other income and
commissions 32,532 36,090 38,602 34,592 26,757
--------- --------- --------- --------- ---------
Total noninterest
income 250,826 222,397 256,008 286,312 294,221
--------- --------- --------- --------- ---------
Adjusted gross income
after provision for
loan losses 385,605 352,394 389,650 419,529 425,608
Noninterest expense:
Employee compensation,
incentives and
benefits 146,201 139,994 143,179 154,175 162,391
Occupancy, equipment
rentals, depreciation,
and maintenance 37,758 33,865 36,720 34,324 30,695
Amortization of mortgage
servicing rights 17,954 18,429 19,852 22,784 29,937
Amortization of
intangible assets 2,666 2,671 2,686 2,629 2,601
Other 97,074 97,920 90,887 100,528 105,067
--------- --------- --------- --------- ---------
Total noninterest
expense 301,653 292,879 293,324 314,440 330,691
--------- --------- --------- --------- ---------
Income before income
taxes 83,952 59,515 96,326 105,089 94,917
Applicable income
taxes 28,529 19,992 32,212 35,671 33,945
--------- --------- --------- --------- ---------
Net income $ 55,423 $ 39,523 $ 64,114 $ 69,418 $ 60,972
========= ========= ========= ========= =========
Net interest
income - FTE $ 152,509 $ 146,143 $ 148,391 $ 148,075 $ 147,118
</TABLE>
T-4
<PAGE> 11
FIRST TENNESSEE NATIONAL CORPORATION
AVERAGE STATEMENTS OF CONDITION - QUARTERLY GROWTH
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
June 30
------------------------------ Growth
(THOUSANDS) 2000 1999 Rate (%)
----------- ------------ ------------ --------
<S> <C> <C> <C>
Loans, net of unearned income:
Commercial $ 4,614,858 $ 4,249,088 8.6 +
Consumer(a) 3,556,245 2,999,728 18.6 +
Permanent mortgage(a) 580,065 448,325 29.4 +
Credit card receivables 552,292 567,056 2.6 --
Real estate construction 541,200 376,433 43.8 +
Nonaccrual - Regional
Banking Group 7,569 12,618 40.0 --
Nonaccrual - Mortgage
Banking 22,110 16,590 33.3 +
------------ ------------
Total loans, net of
unearned income(a) 9,874,339 8,669,838 13.9 +
Investment securities 2,078,623 1,961,012 6.0 +
REMIC securities(a) 698,807 733,405 4.7 --
Mortgage loans held for sale 2,871,333 3,154,836 9.0 --
Other earning assets 778,826 946,587 17.7 --
------------ ------------
Total earning assets 16,301,928 15,465,678 5.4 +
Cash and due from banks 835,129 730,574 14.3 +
Other assets 2,434,048 2,245,225 8.4 +
------------ ------------
Total assets $ 19,571,105 $ 18,441,477 6.1 +
============ ============
Certificates of deposit under
$100,000 and other time $ 2,303,376 $ 2,414,716 4.6 --
Other interest-bearing deposits 3,778,684 3,950,084 4.3 --
------------ ------------
Total interest-bearing
core deposits 6,082,060 6,364,800 4.4 --
Certificates of deposit
$100,000 and more 3,687,760 2,714,710 35.8 +
Short-term borrowed funds 4,431,274 4,145,517 6.9 +
Term borrowings 359,846 376,787 4.5 --
------------ ------------
Total interest-bearing
liabilities 14,560,940 13,601,814 7.1 +
Demand deposits 1,817,423 1,835,262 1.0 --
Other noninterest-bearing
deposits 1,092,605 1,010,191 8.2 +
Other liabilities 718,150 723,260 .7 --
Qualifying capital securities(b) 100,000 100,000 -
Shareholders' equity 1,281,987 1,170,950 9.5 +
------------ ------------
Total liabilities and
shareholders' equity $ 19,571,105 $ 18,441,477 6.1 +
============ ============
<FN>
(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
</FN>
</TABLE>
T-5
<PAGE> 12
FIRST TENNESSEE NATIONAL CORPORATION
AVERAGE STATEMENTS OF CONDITION - YEARLY GROWTH
(Unaudited)
<TABLE>
<CAPTION>
Year-to-date
June 30
----------------------------
Growth
(THOUSANDS) 2000 1999 Rate (%)
----------------- ------------- -------------- ---------------
<S> <C> <C> <C>
Loans, net of unearned income:
Commercial $ 4,538,784 $ 4,200,285 8.1 +
Consumer (c) 3,456,474 3,044,785 13.5 +
Permanent mortgage (c) 559,287 436,391 28.2 +
Credit card receivables 564,018 569,940 1.0 --
Real estate construction 525,029 378,440 38.7 +
Nonaccrual - Regional
Banking Group 7,476 11,786 36.6 --
Nonaccrual - Mortgage
Banking 22,829 19,920 14.6 +
------------ ------------
Total loans, net of
unearned income (c) 9,673,897 8,661,547 11.7 +
Investment securities 2,228,575 1,924,927 15.8 +
REMIC securities (c) 714,789 637,976 12.0 +
Mortgage loans held for sale 2,598,557 3,544,430 26.7 --
Other earning assets 746,332 891,409 16.3 --
------------ ------------
Total earning assets 15,962,150 15,660,289 1.9 +
Cash and due from banks 875,487 716,683 22.2 +
Other assets 2,433,022 2,154,836 12.9 +
------------ ------------
Total assets $ 19,270,659 $ 18,531,808 4.0 +
============ ============
Certificates of deposit under
$100,000 and other time $ 2,316,792 $ 2,436,501 4.9 --
Other interest-bearing deposits 3,810,511 3,963,185 3.9 --
------------ ------------
Total interest-bearing
core deposits 6,127,303 6,399,686 4.3 --
Certificates of deposit
$100,000 and more 3,388,854 3,037,153 11.6 +
Short-term borrowed funds 4,450,368 3,903,159 14.0 +
Term borrowings 376,935 390,447 3.5 --
------------ ------------
Total interest-bearing
liabilities 14,343,460 13,730,445 4.5 +
Demand deposits 1,861,483 1,835,983 1.4 +
Other noninterest-bearing
deposits 971,739 995,200 2.4 --
Other liabilities 739,442 721,437 2.5 +
Qualifying capital securities (d) 100,000 100,000 -
Shareholders' equity 1,254,535 1,148,743 9.2 +
------------ ------------
Total liabilities and
shareholders' equity $ 19,270,659 $ 18,531,808 4.0 +
============ ============
<FN>
(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
</FN>
</TABLE>
T-6
<PAGE> 13
FIRST TENNESSEE NATIONAL CORPORATION
AVERAGE STATEMENTS OF CONDITION - QUARTERLY
(Unaudited)
<TABLE>
<CAPTION>
(MILLIONS) 2Q00 1Q00 4Q99 3Q99 2Q99
--------------------------------- ----------- ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Loans, net of
unearned income:
Commercial $ 4,614.9 $ 4,462.7 $ 4,380.9 $ 4,304.1 $ 4,249.1
Consumer (e) 3,556.2 3,356.7 3,200.6 3,048.6 2,999.7
Permanent mortgage (e) 580.1 538.5 491.1 460.2 448.3
Credit card
receivables 552.3 575.8 581.0 572.8 567.1
Real estate
construction 541.2 508.9 457.8 385.3 376.4
Nonaccrual - Regional
Banking Group 7.6 7.4 10.8 12.1 12.6
Nonaccrual - Mortgage
Banking 22.1 23.5 21.4 20.1 16.6
--------- --------- --------- --------- ---------
Total loans, net of
unearned income (e) 9,874.4 9,473.5 9,143.6 8,803.2 8,669.8
Investment
securities 2,078.6 2,378.5 2,122.1 1,979.3 1,961.0
REMIC securities (e) 698.8 730.8 765.7 813.4 733.4
Mortgage loans
held for sale 2,871.3 2,325.8 2,766.8 3,025.7 3,154.9
Other earning
assets 778.8 713.8 721.3 875.5 946.6
--------- --------- --------- --------- ---------
Total earning assets 16,301.9 15,622.4 15,519.5 15,497.1 15,465.7
Cash and due from banks 835.1 915.8 871.9 809.7 730.6
Other assets 2,434.1 2,432.0 2,391.8 2,326.5 2,245.2
--------- --------- --------- --------- ---------
Total assets $19,571.1 $18,970.2 $18,783.2 $18,633.3 $18,441.5
========= ========= ========= ========= =========
Certificates of deposit
under $100,000 and
other time $ 2,303.4 $ 2,330.2 $ 2,350.7 $ 2,371.0 $ 2,414.7
Other interest-bearing
deposits 3,778.7 3,842.3 3,818.8 3,861.6 3,950.1
--------- --------- --------- --------- ---------
Total interest-bearing
core deposits 6,082.1 6,172.5 6,169.5 6,232.6 6,364.8
Certificates of deposit
$100,000 and more 3,687.7 3,090.0 3,674.1 2,903.1 2,714.7
Short-term borrowed funds 4,431.3 4,469.5 3,645.0 4,245.0 4,145.5
Term borrowings 359.8 394.0 369.2 335.0 376.8
--------- --------- --------- --------- ---------
Total interest-bearing
liabilities 14,560.9 14,126.0 13,857.8 13,715.7 13,601.8
Demand deposits 1,817.4 1,905.5 1,940.1 1,853.3 1,835.3
Other noninterest-
bearing deposits 1,092.6 850.9 892.7 1,005.8 1,010.2
Other liabilities 718.2 760.7 761.2 741.6 723.3
Qualifying capital
securities (f) 100.0 100.0 100.0 100.0 100.0
Shareholders' equity 1,282.0 1,227.1 1,231.4 1,216.9 1,170.9
--------- --------- --------- --------- ---------
Total liabilities and
shareholders' equity $19,571.1 $18,970.2 $18,783.2 $18,633.3 $18,441.5
========= ========= ========= ========= =========
Diluted shares
outstanding 131.8 132.5 133.3 134.2 134.7
<FN>
(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
</FN>
</TABLE>
T-7
<PAGE> 14
FIRST TENNESSEE NATIONAL CORPORATION
PERIOD-END STATEMENTS OF CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30 Growth
(THOUSANDS) 2000 1999 Rate (%)
------------------ ------------ -------------- --------------
<S> <C> <C> <C>
Loans, net of unearned income:
Commercial $ 4,653,494 $ 4,295,676 8.3 +
Consumer (g) 3,484,894 2,954,702 17.9 +
Permanent mortgage (g) 608,827 454,364 34.0 +
Credit card receivables 553,255 576,377 4.0 --
Real estate construction 550,117 351,651 56.4 +
Nonaccrual - Regional
Banking Group 5,973 11,633 48.7 --
Nonaccrual - Mortgage
Banking 20,589 16,874 22.0 +
------------ ------------
Total loans, net of
unearned income (g) 9,877,149 8,661,277 14.0 +
Investment securities 2,093,029 2,000,045 4.6 +
REMIC securities (g) 678,827 837,131 18.9 --
Mortgage loans held for sale 2,950,272 2,868,885 2.8 +
Other earning assets 626,198 691,203 9.4 --
----------- -----------
Total earning assets 16,225,475 15,058,541 7.7 +
Cash and due from banks 844,741 764,018 10.6 +
Other assets 2,734,400 2,801,091 2.4 --
----------- -----------
Total assets $19,804,616 $18,623,650 6.3 +
=========== ===========
Certificates of deposit under
$100,000 and other time $ 2,317,779 $ 2,388,353 3.0 --
Other interest-bearing deposits 3,676,523 3,879,839 5.2 --
----------- -----------
Total interest-bearing
core deposits 5,994,302 6,268,192 4.4 --
Certificates of deposit
$100,000 and more 3,582,025 2,365,589 51.4 +
Short-term borrowed funds 4,366,824 3,964,372 10.2 +
Term borrowings 359,830 326,860 10.1 +
----------- -----------
Total interest-bearing
liabilities 14,302,981 12,925,013 10.7 +
Demand deposits 1,742,288 1,950,476 10.7 --
Other noninterest-bearing
deposits 1,236,806 932,358 32.7 +
Other liabilities 1,120,789 1,521,718 26.3 --
Qualifying capital securities (h) 100,000 100,000 -
Shareholders' equity 1,301,752 1,194,085 9.0 +
----------- -----------
Total liabilities and
shareholders' equity $19,804,616 $18,623,650 6.3 +
=========== ===========
<FN>
(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
</FN>
</TABLE>
T-8
<PAGE> 15
FIRST TENNESSEE NATIONAL CORPORATION
ASSET QUALITY HIGHLIGHTS
(Unaudited)
<TABLE>
<CAPTION>
(THOUSANDS) 2Q00 1Q00 4Q99 3Q99 2Q99
--------------------------- ----------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR
LOAN LOSSES:
Beginning Reserve $ 140,736 $ 139,603 $ 139,426 $ 138,595 $ 139,387
Provision 17,077 15,497 14,008 14,110 14,979
Securitization adjustment (2,173) - - - (1,790)
Adjustment due to
divestiture - - - (893) -
Charge-offs (14,922) (16,487) (16,216) (14,366) (16,102)
Loan recoveries 2,004 2,123 2,385 1,980 2,121
--------- --------- --------- --------- ---------
Ending Balance $ 142,722 $ 140,736 $ 139,603 $ 139,426 $ 138,595
========= ========= ========= ========= =========
NONPERFORMING ASSETS:
Nonperforming loans $ 5,973 $ 7,047 $ 7,054 $ 11,476 $ 11,633
Foreclosed real
estate 4,108 5,698 5,777 5,825 5,267
Other assets 90 91 91 85 202
--------- --------- --------- --------- ---------
Total Regional
Banking Group 10,171 12,836 12,922 17,386 17,102
--------- --------- --------- --------- ---------
Mortgage Banking
nonperforming
loans 20,589 24,621 22,064 21,215 16,874
Mortgage Banking
foreclosed real
estate 13,769 12,716 12,093 11,240 11,701
--------- --------- --------- --------- ---------
Total nonperforming
assets $ 44,529 $ 50,173 $ 47,079 $ 49,841 $ 45,677
========= ========= ========= ========= =========
Loans and leases
past due 90 days
or more $ 38,013 $ 31,259 $ 29,849 $ 24,004 $ 23,593
</TABLE>
T-9
<PAGE> 16
FIRST TENNESSEE NATIONAL CORPORATION
ASSET QUALITY HIGHLIGHTS
(Unaudited)
<TABLE>
<CAPTION>
2Q00 1Q00 4Q99 3Q99 2Q99
----------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
TOTAL FIRST TENNESSEE:
Nonperforming loans
ratio (i) .27% .33% .31% .37% .33%
Nonperforming assets
ratio (j) .45 .52 .50 .56 .53
Allowance to total loans 1.44 1.47 1.49 1.56 1.60
Allowance to
nonperforming loans 537.32 444.41 479.44 426.50 486.18
Allowance to
nonperforming assets 320.51 280.50 296.53 279.74 303.42
Net charge-off ratio (k) .52 .61 .61 .56 .65
REGIONAL BANKING GROUP:
Nonperforming loans
ratio (i) .07% .08% .08% .14% .14%
Nonperforming assets
ratio (j) .11 .14 .15 .20 .21
Allowance to total loans 1.45 1.46 1.47 1.53 1.58
Allowance to
nonperforming loans 2,227.74 1,854.58 1,830.82 1,134.93 1,121.05
Allowance to
nonperforming assets 1,308.26 1,018.17 999.43 749.14 762.55
<FN>
(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
</FN>
</TABLE>
T-10
<PAGE> 17
FIRST TENNESSEE NATIONAL CORPORATION
NET INTEREST MARGIN HIGHLIGHTS
(Unaudited)
<TABLE>
<CAPTION>
2Q00 1Q00 4Q99 3Q99 2Q99
--------------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
REGIONAL BANKING GROUP
Yields on earning assets 8.46 % 8.23 % 8.06 % 7.98 % 7.80 %
Rates paid on interest-
bearing liabilities 4.60 4.25 3.99 3.90 3.73
------ ------ ------ ------ ------
Net interest spread 3.86 3.98 4.07 4.08 4.07
------ ------ ------ ------ ------
Effect of interest-free
sources .86 .76 .82 .74 .77
Loan fees .17 .15 .13 .15 .13
FRB interest and penalties - .01 .01 - .01
------ ------ ------ ------ ------
Net interest margin-
REGIONAL BANKING GROUP 4.89 % 4.90 % 5.03 % 4.97 % 4.98 %
MORTGAGE BANKING (1.03) (1.04) (1.07) (1.00) (.99)
CAPITAL MARKETS (.13) (.13) (.16) (.17) (.20)
TRANSACTION PROCESSING .01 .01 .02 .02 .02
------ ------ ------ ------ ------
Net interest margin 3.74 % 3.74 % 3.82 % 3.82 % 3.81 %
====== ====== ====== ====== ======
</TABLE>
T-11
<PAGE> 18
FIRST TENNESSEE NATIONAL CORPORATION
CAPITAL HIGHLIGHTS
(Dollars in millions except per share amounts, Unaudited)
<TABLE>
<CAPTION>
2Q00 1Q00 4Q99 3Q99 2Q99
---------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Tier 1 Capital(l) $ 1,252.9 $ 1,222.9 $ 1,218.1 $ 1,208.5 $ 1,135.1
Tier 2 Capital(l) 452.6 450.2 448.5 466.2 465.4
---------- ---------- ---------- ---------- ----------
Total Capital(l) $ 1,705.5 $ 1,673.1 $ 1,666.6 $ 1,674.7 $ 1,600.5
========== ========== ========== ========== ==========
Risk-Adjusted
Assets(l) $ 15,026.0 $ 14,829.6 $ 13,893.3 $ 13,744.0 $ 13,340.5
Tier 1 Ratio(l) 8.34% 8.25% 8.77% 8.79% 8.51%
Tier 2 Ratio(l) 3.01 3.03 3.23 3.39 3.49
---------- ---------- ---------- ---------- ----------
Total Capital
Ratio(l) 11.35% 11.28% 12.00% 12.18% 12.00%
========== ========== ========== ========== ==========
Leverage Ratio(l) 6.44% 6.48% 6.53% 6.53% 6.21%
Shareholders' Equity/Assets
Ratio (m) 6.55 6.47 6.56 6.53 6.35
Total Equity (n)/Assets
Ratio (m) 7.06 7.00 7.09 7.07 6.89
Book Value $ 9.95 $ 9.67 $ 9.52 $ 9.51 $ 9.12
<FN>
(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
</FN>
</TABLE>
T-12
<PAGE> 19
FIRST TENNESSEE NATIONAL CORPORATION
REGIONAL BANKING GROUP HIGHLIGHTS
(Earnings in thousands, Unaudited)
(Statistics in millions)
<TABLE>
<CAPTION>
2Q00 1Q00 4Q99 3Q99 2Q99
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
REGIONAL BANKING GROUP
----------------------
Total Revenues $200,820 $198,730 $204,324 $196,433 $189,529
Loan Loss Provision 17,077 15,527 12,292 12,498 12,146
Operating Expenses 114,908 117,650 111,151 114,636 114,688
-------- -------- -------- -------- --------
Pre-Tax Income $ 68,835 $ 65,553 $ 80,881 $ 69,299 $ 62,695
RETAIL/COMMERCIAL BANK
----------------------
Total Revenues $167,727 $165,731 $171,555 $163,634 $158,769
Loan Loss Provision 11,284 9,755 6,508 7,268 6,808
Operating Expenses 100,373 101,518 96,090 98,496 99,643
-------- -------- -------- -------- --------
Pre-Tax Income $ 56,070 $ 54,458 $ 68,957 $ 57,870 $ 52,318
CREDIT CARD
-----------
Total Revenues $ 17,143 $ 17,133 $ 17,184 $ 17,341 $ 16,044
Loan Loss Provision 5,793 5,772 5,784 5,230 5,338
Operating Expenses 4,908 6,123 4,878 5,825 6,253
-------- -------- -------- -------- --------
Pre-Tax Income $ 6,442 $ 5,238 $ 6,522 $ 6,286 $ 4,453
KEY STATISTICS:
Outstandings $ 553.3 $ 555.7 $ 607.2 $ 578.4 $ 576.4
Net Charge-offs/
Average Loans 4.05% 3.90% 3.82% 3.55% 3.51%
TRUST SERVICES
--------------
Total Revenues $ 15,950 $ 15,866 $ 15,585 $ 15,458 $ 14,716
Operating Expenses 9,627 10,009 10,183 10,315 8,792
-------- -------- -------- -------- --------
Pre-Tax Income $ 6,323 $ 5,857 $ 5,402 $ 5,143 $ 5,924
KEY STATISTICS:
Managed Assets(o)
(FTBNA) $9,801.8 $9,840.0 $9,642.0 $9,047.6 $9,416.4
<FN>
(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.
</FN>
</TABLE>
T-13
<PAGE> 20
FIRST TENNESSEE NATIONAL CORPORATION
NATIONAL BUSINESS LINES HIGHLIGHTS
(Earnings in thousands, Unaudited)
<TABLE>
<CAPTION>
2Q00 1Q00 4Q99 3Q99 2Q99
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
MORTGAGE BANKING
----------------
Total Revenues $ 149,441 $ 112,490 $ 142,556 $ 174,630 $ 192,019
Loan Loss Provision - (30) 1,716 1,612 2,833
Operating Expenses 141,496 129,021 134,506 152,098 170,240
---------- ---------- ---------- ---------- ----------
Pre-Tax Income $ 7,945 $ (16,501) $ 6,334 $ 20,920 $ 18,946
Key Statistics (in millions):
Origination Volume $ 4,286.6 $ 3,508.4 $ 3,868.2 $ 4,387.1 $ 5,639.3
Servicing Portfolio $ 45,774.3 $ 43,070.4 $ 44,628.4 $ 46,917.8 $ 44,281.2
CAPITAL MARKETS
---------------
Total Revenues $ 20,329 $ 25,124 $ 25,519 $ 28,813 $ 31,410
Operating Expenses 17,178 19,903 19,182 20,886 24,078
---------- ---------- ---------- ---------- ----------
Pre-Tax Income $ 3,151 $ 5,221 $ 6,337 $ 7,927 $ 7,332
Key Statistics (in millions):
Total Securities
Bought/Sold $188,189.0 $148,048.1 $120,886.9 $128,785.5 $138,765.6
Total
Underwritings $ 4,112.5 $ 4,409.8 $ 2,667.0 $ 5,936.6 $ 8,036.0
TRANSACTION PROCESSING
----------------------
Total Revenues $ 32,661 $ 30,595 $ 31,530 $ 32,652 $ 28,419
Operating Expenses 25,948 24,182 26,455 24,285 19,655
---------- ---------- ---------- ---------- ----------
Pre-Tax Income $ 6,713 $ 6,413 $ 5,075 $ 8,367 $ 8,764
Key Statistics (in thousands):
Merchant
Transactions
Processed 35,067.1 31,103.1 31,535.4 32,930.8 43,132.4
MONEY BELT
Transactions
Processed
(correspondent) 8,720.8 7,610.2 7,945.2 7,979.2 7,737.4
First Express
Transactions
Processed 127,290.2 122,479.7 119,797.5 122,403.6 90,721.3
<FN>
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.
</FN>
</TABLE>
T-14
