October 14, 1998

First Tennessee Reports Record Earnings and 13 Percent Growth

MEMPHIS, Tenn.--Oct. 14, 1998--First Tennessee National Corporation (NASDAQ/NMS:FTEN)(First Tennessee) announced today that it had achieved record earnings of $61.8 million, up 13 percent over last year's third quarter earnings. Diluted earnings per share increased 12 percent to $.47. Return on average shareholders' equity was 24.4 percent for the third quarter of 1998 and return on average assets was 1.45 percent.

For the first nine months of 1998, net income totaled $160.9 million, or $1.22 per diluted share, compared with $139.6 million, or $1.06 per diluted share, for the first nine months of 1997. This represented a 15 percent growth over the same period in 1997 for both net income and earnings per share. Return on average shareholders' equity for the first nine months of 1998 was 22.1 percent and return on average assets was 1.35 percent, compared with 21.5 percent and 1.43 percent, respectively, in 1997.

"I am proud to report our best quarter ever," said Ralph Horn, chairman and chief executive officer of First Tennessee. "In spite of an uncertain economic environment in this country and the continued downturn in the world economy, we were able to grow our revenue more than 30 percent. Because our strategy with First Tennessee Capital Markets is one of distribution rather than trading, that division experienced strong growth while many of its competitors struggled with deteriorating market conditions. Also, our mortgage operations, FT Mortgage Companies, achieved record-breaking revenue for the quarter. These two important business lines continue to show the capability of operating predictably and profitably in all sorts of market conditions. Unfortunately, the stock market seems to have mistakenly lumped us in with many of the larger banks that have more exposure to world-wide negative current events."

Earnings Highlights (1998 third quarter compared with 1997 third quarter)

  • The $61.8 million, or $.47 per diluted share, earned in 1998 compared with $54.7 million, or $.42 per diluted share, earned in 1997.

  • Fee income contributed approximately 67 percent to total revenues, up from 59 percent in 1997.

  • Return on average shareholders' equity was 24.4 percent for the third quarter of 1998, compared with a return of 24.6 percent for the third quarter of 1997.

  • Return on average assets was 1.45 percent in the third quarter of 1998 compared with 1.61 percent in the third quarter of 1997.

  • Average assets grew 25 percent from the previous year, with 51 percent of this growth coming from the increase in the mortgage warehouse.

  • Asset quality improved with nonperforming assets and charge-offs declining from the previous year.

  • Total assets were $17.2 billion, shareholders' equity was $1.1 billion and market capitalization was $3.5 billion at September 30, 1998. At September 30, 1997, total assets were $14.1 billion, shareholders' equity was $.9 billion and market capitalization was $3.7 billion.

Noninterest Income

Fee income (noninterest income excluding securities gains and losses) was $267.9 million for the third quarter of 1998, representing a growth rate of 49 percent. The growth in fee income was led by increases in mortgage banking and capital markets. For the first nine months of 1998, noninterest income increased 43 percent over the same period in 1997.

Fee income in mortgage banking, First Tennessee's largest contributing business line to noninterest income, increased 81 percent to $160.1 million from the third quarter of 1997. The increase came primarily from the mortgage origination process (originations and sales into the secondary market). A favorable interest rate environment and a strong real estate market led to a record $5.6 billion of originations for the third quarter of 1998 compared with originations of $3.0 billion for the third quarter of 1997. Approximately 47 percent of the origination volume during the quarter came from refinance activity compared with 26 percent in the third quarter of 1997. Despite heavy prepayments during the quarter, the servicing portfolio grew 37 percent to $35.3 billion at September 30, 1998, from $25.7 billion at September 30, 1997. For the first nine months of 1998, mortgage banking noninterest income was $375.1 million, an increase of 65 percent over the same period in 1997.

During the third quarter of 1998, fee income from First Tennessee Capital Markets grew 22 percent to $35.4 million. Strong performance in all of the offices, including the recently opened New York office, and continued expansion of the customer base contributed to the increase in customer transactions. Capital markets ranked as one of the largest U.S. agency underwriters for the quarter. Total securities bought and sold for customers increased from $63.0 billion in the third quarter of 1997 to $109.1 billion in the third quarter of 1998. Fee income for the first nine months of 1998 was $103.6 million, an increase of 49 percent over the same period in 1997.

From the third quarter of 1997, deposit transactions and cash management fees increased 5 percent to $23.4 million. Merchant processing fees grew 17 percent to $10.1 million as a result of higher volumes. Cardholder fees grew 9 percent to $5.4 million from the third quarter of 1997 due to moderate growth in the credit card portfolio coupled with strong purchasing activity and higher interchange collections. Growth in assets under management and acquisition activity created the 17 percent growth to $12.6 million in trust services and investment management fees.

Other income and commissions grew 28 percent from the third quarter of 1997. This growth was spread out over a number of categories, including insurance sales and other service charges, which reflected strong growth in investment/mutual fund sales and servicing fees collected from securitized transactions.

For the first nine months of 1998, fee income in deposit transactions and cash management was $66.1 million, an increase of 5 percent; merchant processing fees were $25.0 million, an increase of 7 percent; cardholder fees were $15.3 million, an increase of 6 percent; trust services and investment management service fees were $38.1 million, an increase of 29 percent; and other income and commissions increased 19 percent to $54.7 million.

Net Interest Income

Net interest income (on a fully taxable equivalent basis) increased 9 percent from the third quarter of 1997 to $135.7 million primarily due to growth in earning assets. The mortgage warehouse produced almost 65 percent of the 23 percent growth in earning assets. Growth in demand deposit accounts contributed to the improvement in the regional banking group's margin from 4.74 percent in the third quarter of 1997 to 4.87 percent in the third quarter of 1998. The decline in the consolidated net interest margin (from 4.24 percent in the third quarter of 1997 to 3.75 percent in the third quarter of 1998) resulted naturally from the build-up in the mortgage warehouse. Because the spread between the rates on mortgage loans temporarily in the warehouse and the related short-term funding rates is less than the comparable spread earned in the regional banking group, the overall net interest margin was compressed. First Tennessee's margin is affected by the activity levels and related funding for its other fee-based businesses, as these business lines generally produce narrower margins than traditional banking activities.

For the first nine months of 1998, net interest income increased 10 percent to $397.0 million primarily as a result of the 20 percent increase in earning assets. The year-to-date consolidated margin for 1998 was 3.87 percent compared with 4.25 percent for the same period in 1997.

Noninterest Expense

Total noninterest expense (operating expense) increased 43 percent from third quarter 1997 to $292.7 million for the third quarter of 1998. Employee compensation, incentives and benefits (personnel expense), the largest component of noninterest expense, increased 32 percent from the previous year. Expense growth in mortgage banking and capital markets varies with the amount and mix of the products and/or services sold and impacted the growth rates because of the high volume levels during the quarter. Excluding these lines of business, total operating expense increased 16 percent. Investments in expanding consumer lending beyond our traditional markets, growth in our insurance business, consolidation expenses of our merchant processing operation, and technology contributed to this growth rate.

As a result of a larger servicing portfolio and additional prepayments, amortization of mortgage servicing rights increased 208 percent from $9.4 million in the third quarter of 1997 to $28.9 million for the same period in 1998. The majority of the 47 percent growth in other expense was related to increases in mortgage banking activities.

For the first nine months of 1998, operating expense increased 37 percent to $782.0 million, and personnel expense increased 30 percent. Excluding mortgage banking and capital markets, total operating expense increased 12 percent. Amortization of mortgage servicing rights increased 164 percent for the nine-month period and other expenses, principally related to mortgage banking, increased 39 percent.

Average Balance Sheet

Total average assets for the third quarter grew 25 percent from the previous year to $16.9 billion, with loan growth (which excludes securitized loans) of 1 percent. Managed loans (includes loans securitized in the second quarter of 1998) grew 10 percent. Commercial loan growth was 9 percent and real estate construction loans grew 20 percent compared with the previous year. On a managed basis, consumer loans grew 11 percent and the permanent mortgage portfolio grew 8 percent. The mortgage warehouse (mortgage loans held for sale) increased 154 percent (from $1.1 billion to $2.9 billion) over third quarter 1997 levels, reflecting strong origination volume. Comparing third quarter 1998 to third quarter 1997, interest-bearing core deposits grew 4 percent, total core deposits increased 8 percent and short-term purchased funds increased 67 percent. Shareholders' equity increased 14 percent from the third quarter of 1997.

Asset Quality

The provision for loan losses increased $.4 million from the third quarter of 1997 due to loan growth and inherent risk in the loan portfolio. The allowance for loan losses to total loans at September 30, 1998, was 1.63 percent compared with 1.53 percent at September 30, 1997. The ratio of nonperforming assets to total loans improved to .52 percent for the third quarter of 1998 from .62 percent for the same period in 1997. The ratio of net charge-offs to average loans was .38 percent for the third quarter of 1998, a decline from .62 percent for the third quarter of 1997. The level of nonperforming assets improved in both mortgage banking and the regional banking group from the third quarter of 1997.

General

First Tennessee, headquartered in Memphis, Tenn., is a high-performing, nationwide, diversified financial services institution and is 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 and three national lines of business: FT Mortgage Companies, First Tennessee Capital Markets and transaction processing. Transaction processing includes credit card merchant processing, MONEYBELT (our automated teller machine network), First Express (our nationwide check clearing operation), and other 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. More information is available at First Tennessee's web site at www.ftb.com.

                 FIRST TENNESSEE NATIONAL CORPORATION
                  PER SHARE DATA AND FINANCIAL RATIOS
                              (Unaudited)

                                           Year-to-date
                                           September 30
                                          ---------------   Growth
                                           1998     1997    Rate (%)
                                          ------   ------   --------

PER SHARE DATA:
---------------
Diluted earnings per share                $ 1.22   $ 1.06     15.1 +
Dividends declared                          .495      .45

SELECTED FINANCIAL RATIOS:
--------------------------
Return on average assets                    1.35%    1.43%
Return on average shareholders' equity      22.1     21.5

                                           Quarter Ended
                                           September 30
                                          ---------------
                                                            Growth
                                           1998     1997    Rate (%)
                                          ------   ------   --------
PER SHARE DATA:
---------------
Diluted earnings per share                 $ .47    $ .42     11.9 +
Dividends declared                          .165      .15

SELECTED FINANCIAL RATIOS:
--------------------------
Return on average assets                    1.45%    1.61%
Return on average shareholders' equity      24.4     24.6

                         QUARTERLY INFORMATION

                                  3Q98    2Q98    1Q98    4Q97    3Q97
                                 -----   -----   -----   -----   -----

PER SHARE DATA:
---------------
Diluted earnings per share       $ .47   $ .40   $ .35   $ .44   $ .42
Dividends declared                .165    .165    .165    .165     .15

SELECTED FINANCIAL RATIOS:
--------------------------
Return on average assets          1.45%   1.31%   1.26%   1.66%   1.61%
Return on average shareholders'
             equity               24.4    22.2    19.6    25.1    24.6

                                  T-1

                 FIRST TENNESSEE NATIONAL CORPORATION
                STATEMENTS OF INCOME - QUARTERLY GROWTH
                              (Unaudited)


                                       Quarter Ended
                                       September 30
                                  -----------------------      Growth
(THOUSANDS)                         1998           1997        Rate (%)
---------------------             --------       --------      -------
Interest income                   $288,267       $241,745       19.2 +
Less interest expense              153,606        118,137       30.0 +
                                  --------       --------
   Net interest income             134,661        123,608        8.9 +
Provision for loan losses           13,127         12,753        2.9 +
                                  --------       --------
   Net interest income after
      provision for loan
      losses                       121,534        110,855        9.6 +

Noninterest income:
   Mortgage banking                160,063         88,402       81.1 +
   Capital markets                  35,370         28,903       22.4 +
   Deposit transactions and
      cash management               23,358         22,327        4.6 +
   Merchant processing              10,074          8,575       17.5 +
   Cardholder fees                   5,392          4,941        9.1 +
   Trust and investment
      management                    12,619         10,805       16.8 +
   Securities gains/(losses)             9            (23)       N/A
   Other income and
      commissions                   21,035         16,416       28.1 +
                                  --------       --------
        Total noninterest income   267,920        180,346       48.6 +
                                  --------       --------
        Adjusted gross income
          after provision for
          loan losses              389,454        291,201       33.7 +

Noninterest expense:
   Employee compensation,
      incentives, and
      benefits                     145,038        109,542       32.4 +
   Occupancy, equipment
      rentals, depreciation,
      and maintenance               25,179         20,784       21.1 +
   Amortization of mortgage
      servicing rights              28,851          9,371      207.9 +
   Amortization of intangible
      assets                         2,726          2,419       12.7 +
   Other                            90,913         61,980       46.7 +
                                  --------       --------
      Total noninterest expense    292,707        204,096       43.4 +
                                  --------       --------
      Income before income
        taxes                       96,747         87,105       11.1 +
      Applicable income taxes       34,927         32,417        7.7 +
                                  --------       --------
      Net income                  $ 61,820       $ 54,688       13.0 +
                                  ========       ========

      Net interest income - FTE   $135,651       $124,674        8.8 +

                                  T-2

              FIRST TENNESSEE NATIONAL CORPORATION
              STATEMENTS OF INCOME - YEARLY GROWTH
                          (Unaudited)


                                          Year-to-date
                                          September 30
                                       -------------------    Growth
(THOUSANDS)                               1998        1997    Rate (%)
---------------------                  --------- ---------  ---------
Interest income                        $ 821,429  $ 694,983     18.2 +
Less interest expense                    427,439    336,848     26.9 +
                                       ---------  ---------
   Net interest income                   393,990    358,135     10.0 +
Provision for loan losses                 39,427     37,783      4.4 +
                                       ---------  ---------
   Net interest income after
      provision for loan
      losses                             354,563    320,352     10.7 +

Noninterest income:
   Mortgage banking                      375,120    227,537     64.9 +
   Capital markets                       103,590     69,358     49.4 +
   Deposit transactions and
      cash management                     66,125     63,109      4.8 +
   Merchant processing                    25,023     23,488      6.5 +
   Cardholder fees                        15,258     14,358      6.3 +
   Trust and investment
      management                          38,080     29,573     28.8 +
   Securities gains/(losses)                 (53)      (783)    93.2 +
   Other income and
      commissions                         54,677     45,959     19.0 +
                                       ---------  ---------
        Total noninterest income         677,820    472,599     43.4 +
                                       ---------  ---------
        Adjusted gross income
         after provision for
         loan losses                   1,032,383    792,951     30.2 +

Noninterest expense:
   Employee compensation,
      incentives, and
      benefits                           391,452    300,202     30.4 +
   Occupancy, equipment
      rentals, depreciation,
      and maintenance                     68,981     61,844     11.5 +
   Amortization of mortgage
      servicing rights                    70,796     26,862    163.6 +
   Amortization of intangible
      assets                               8,021      7,229     11.0 +
   Other                                 242,735    174,343     39.2 +
                                       ---------  ---------
      Total noninterest expense          781,985    570,480     37.1 +
                                       ---------  ---------
      Income before income
       taxes                             250,398    222,471     12.6 +
      Applicable income taxes             89,477     82,856      8.0 +
                                       ---------  ---------
      Net income                       $ 160,921  $ 139,615     15.3 +
                                       =========  =========

      Net interest income - FTE        $ 397,027  $ 361,436      9.8 +

                                  T-3

                 FIRST TENNESSEE NATIONAL CORPORATION
                   STATEMENTS OF INCOME - QUARTERLY
                              (Unaudited)

(THOUSANDS)        3Q98       2Q98       1Q98       4Q97       3Q97
---------------  --------   --------   --------   --------   --------
Interest income  $288,267   $276,121   $257,041   $246,310   $241,745
Less interest
 expense          153,606    143,932    129,901    121,349    118,137
                 --------   --------   --------   --------   --------
  Net interest
   income         134,661    132,189    127,140    124,961    123,608
Provision for
 loan losses       13,127     12,785     13,515     13,332     12,753
                 --------   --------   --------   --------   --------
   Net interest
    income after
    provision for
    loan losses   121,534    119,404    113,625    111,629    110,855

Noninterest income:
 Mortgage
  banking         160,063    122,500     92,557    102,594     88,402
 Capital
  markets          35,370     30,223     37,997     28,952     28,903
 Deposit
  transactions
  and cash
  management       23,358     22,732     20,035     22,938     22,327
 Merchant
  processing       10,074      7,740      7,209      8,623      8,575
 Cardholder fees    5,392      5,354      4,512      5,475      4,941
 Trust and
  investment
  management       12,619     13,340     12,121     11,368     10,805
 Securities
  gains/(losses)        9        (91)        29         70        (23)
 Other income
  and commissions  21,035     18,125     15,517     15,511     16,416
                 --------   --------   --------   --------   --------
   Total
    noninterest
    income        267,920    219,923    189,977    195,531    180,346
                 --------   --------   --------   --------   --------
   Adjusted gross
    income after
    provision for
    loan losses   389,454    339,327    303,602    307,160    291,201

Noninterest expense:
 Employee
  compensation,
  incentives, and
  benefits        145,038    132,771    113,643    109,581    109,542
 Occupancy,
  equipment
  rentals,
  depreciation,
  and
  maintenance      25,179     22,671     21,131     21,097     20,784
 Amortization
  of mortgage
  servicing
  rights           28,851     24,645     17,300     10,590      9,371
 Amortization of
  intangible
  assets            2,726      2,655      2,640      2,402      2,419
 Other             90,913     75,628     76,194     70,894     61,980
                 --------   --------   --------   --------   --------
  Total
   noninterest
   expense        292,707    258,370    230,908    214,564    204,096
                 --------   --------   --------   --------   --------
  Income before
   income taxes    96,747     80,957     72,694     92,596     87,105
  Applicable
   income taxes    34,927     28,211     26,339     34,739     32,417
                 --------   --------   --------   --------   --------
  Net income     $ 61,820   $ 52,746   $ 46,355   $ 57,857   $ 54,688
                 ========   ========   ========   ========   ========
  Net interest
   income - FTE  $135,651   $133,197   $128,179   $125,997   $124,674

                                  T-4

                 FIRST TENNESSEE NATIONAL CORPORATION
          AVERAGE STATEMENTS OF CONDITION - QUARTERLY GROWTH
                              (Unaudited)

                                      Quarter Ended
									   September 30
                                      -------------
                                                             Growth
(THOUSANDS)                         1998         1997        Rate (%)
-----------------               -----------  -----------     --------
Loans, net of unearned income:
 Commercial                     $ 4,010,127  $ 3,673,096       9.2   +
 Consumer (a)                     2,698,734    2,781,323       3.0  --
 Permanent mortgage (a)             390,867      640,656      39.0  --
 Credit card receivables            569,566      544,010       4.7   +
 Real estate construction           409,237      339,636      20.5   +
 Nonaccrual - Regional
  Banking Group                       7,235       10,311      29.8  --
 Nonaccrual - Mortgage
  Banking                            16,420       25,861      36.5  --
                                -----------  -----------
 Total loans, net of
  unearned income (a)             8,102,186    8,014,893       1.1   +
Investment securities             1,951,020    2,102,738       7.2  --
REMIC securities (a)                664,782            -         -
Mortgage loans held for sale      2,868,570    1,127,946     154.3   +
Other earning assets                860,596      476,242      80.7   +
                                -----------  -----------
 Total earning assets            14,447,154   11,721,819      23.3   +
Cash and due from banks             657,393      628,420       4.6   +
Other assets                      1,772,563    1,138,186      55.7   +
                                -----------  -----------
 Total assets                   $16,877,110  $13,488,425      25.1   +
                                ===========  ===========

Certificates of deposit under
 $100,000 and other time        $ 2,564,143  $ 2,783,340       7.9  --
Other interest-bearing deposits   3,724,212    3,267,627      14.0   +
                                -----------  -----------
Total interest-bearing
 core deposits                    6,288,355    6,050,967       3.9   +
Certificates of deposit
 $100,000 and more                2,088,210      820,473     154.5   +
Short-term borrowed funds         3,847,308    2,739,117      40.5   +
Term borrowings                     266,484      180,824      47.4   +
                                -----------  -----------
Total interest-bearing
 liabilities                     12,490,357    9,791,381      27.6   +
Demand deposits                   1,751,334    1,581,677      10.7   +
Other noninterest-bearing
 deposits                           932,098      653,078      42.7   +
Other liabilities                   597,331      479,037      24.7   +
Qualifying capital securities (b)   100,000      100,000         -
Shareholders' equity              1,005,990      883,252      13.9   +
                                -----------  -----------
Total liabilities and
 shareholders' equity           $16,877,110  $13,488,425      25.1   +
                                ===========  ===========

(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)                             1998        1997      Rate (%)
-----------------                   -----------  -----------  --------
Loans, net of unearned income:
 Commercial                         $ 3,917,051  $ 3,612,577    8.4  +
 Consumer (c)                         2,750,132    2,737,399     .5  +
 Permanent mortgage (c)                 503,247      632,718   20.5 --
 Credit card receivables                560,384      543,096    3.2  +
 Real estate construction               410,799      317,752   29.3  +
 Nonaccrual - Regional
    Banking Group                         8,587       11,125   22.8 --
 Nonaccrual - Mortgage
    Banking                              24,306       28,822   15.7 --
                                    -----------  -----------
  Total loans, net of
   unearned income (c)                8,174,506    7,883,489    3.7  +
Investment securities                 1,999,695    2,155,624    7.2 --
REMIC securities (c)                    381,197            -      -
Mortgage loans held for sale          2,430,267      909,303  167.3  +
Other earning assets                    701,355      410,923   70.7  +
                                    -----------  -----------
 Total earning assets                13,687,020   11,359,339   20.5  +
Cash and due from banks                 684,410      655,074    4.5  +
Other assets                          1,611,208    1,070,945   50.4  +
                                    -----------  -----------
 Total assets                       $15,982,638  $13,085,358   22.1  +
                                    ===========  ===========

Certificates of deposit under
 $100,000 and other time            $ 2,615,703  $ 2,817,306    7.2 --
Other interest-bearing deposits       3,726,170    3,288,259   13.3  +
                                    -----------  -----------
 Total interest-bearing
  core deposits                       6,341,873    6,105,565    3.9  +
Certificates of deposit
 $100,000 and more                    1,716,823      849,145  102.2  +
Short-term borrowed funds             3,439,577    2,355,704   46.0  +
Term borrowings                         234,745      190,867   23.0  +
                                    -----------  -----------
Total interest-bearing
 liabilities                         11,733,018    9,501,281   23.5  +
Demand deposits                       1,713,496    1,699,108     .8  +
Other noninterest-bearing deposits      864,563      476,298   81.5  +
Other liabilities                       599,245      443,613   35.1  +
Qualifying capital securities (d)       100,000       98,169    1.9  +
Shareholders' equity                    972,316      866,889   12.2  +
                                    -----------  -----------
Total liabilities and
 shareholders' equity               $15,982,638  $13,085,358   22.1  +
                                    ===========  ===========

(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)         3Q98       2Q98       1Q98       4Q97       3Q97
-------------   ---------  ---------  ---------  ---------  ---------
Loans, net of
 unearned income:
 Commercial      $4,010.1   $3,929.9   $3,808.9   $3,661.2   $3,673.1
 Consumer (e)     2,698.7    2,674.4    2,879.2    2,827.1    2,781.3
 Permanent
  mortgage (e)      390.9      453.0      668.9      655.3      640.7
 Credit card
  receivables       569.6      550.8      560.7      549.5      544.0
 Real estate
  construction      409.3      410.1      413.1      395.8      339.6
 Nonaccrual
  - Regional
  Banking Group       7.2        9.0        9.6       11.2       10.3
 Nonaccrual
  - Mortgage
  Banking            16.4       28.3       28.3       28.0       25.9
                ---------  ---------  ---------  ---------  ---------
 Total loans,
  net of
  unearned
  income (e)      8,102.2    8,055.5    8,368.7    8,128.1    8,014.9
Investment
 securities       1,951.0    1,950.6    2,099.1    2,091.4    2,102.7
REMIC
 securities (e)     664.8      471.5          -          -          -
Mortgage loans
 held for sale    2,868.6    2,705.8    1,703.7    1,292.5    1,128.0
Other earning
 assets             860.6      641.3      599.3      453.6      476.2
                ---------  ---------  ---------  ---------  ---------
  Total earning
   assets        14,447.2   13,824.7   12,770.8   11,965.6   11,721.8
Cash and due
 from banks         657.4      697.5      698.8      668.9      628.4
Other assets      1,772.5    1,601.3    1,456.3    1,225.4    1,138.2
                ---------  ---------  ---------  ---------  ---------
  Total assets  $16,877.1  $16,123.5  $14,925.9  $13,859.9  $13,488.4
                =========  =========  =========  =========  =========
Certificates
 of deposit
 under $100,000
 and other time  $2,564.2   $2,613.1   $2,671.1   $2,740.7   $2,783.4
Other
 interest-bearing
 deposits         3,724.2    3,728.3    3,726.0    3,494.1    3,267.6
                ---------  ---------  ---------  ---------  ---------
  Total interest-
   bearing core
   deposits       6,288.4    6,341.4    6,397.1    6,234.8    6,051.0
Certificates
 of deposit
 $100,000 and
 more             2,088.2    1,791.0    1,262.2      824.8      820.5
Short-term
 borrowed funds   3,847.3    3,455.4    3,006.8    2,742.3    2,739.1
Term borrowings     266.5      266.5      170.1      169.6      180.8
                ---------  ---------  ---------  ---------  ---------
  Total interest-
   bearing
   liabilities   12,490.4   11,854.3   10,836.2    9,971.5    9,791.4
Demand deposits   1,751.3    1,705.9    1,682.5    1,686.0    1,581.7
Other
 noninterest-
 bearing deposits   932.1      876.7      783.2      689.6      653.1
Other liabilities   597.3      633.1      567.0      498.6      479.0
Qualifying
 capital
 securities (f)     100.0      100.0      100.0      100.0      100.0
Shareholders'
 equity           1,006.0      953.5      957.0      914.2      883.2
                ---------  ---------  ---------  ---------  ---------
  Total
   liabilities
   and
   shareholders'
   equity       $16,877.1  $16,123.5  $14,925.9  $13,859.9  $13,488.4
                =========  =========  =========  =========  =========
Diluted shares
   outstanding      131.5      131.6      132.2      132.2      131.8

(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)                          1998          1997      Rate (%)
------------------                -----------   -----------  ---------
Loans, net of unearned income:
   Commercial                     $ 4,076,573   $ 3,692,179  10.4  +
   Consumer (g)                     2,832,518     2,810,802    .8  +
   Permanent mortgage (g)             408,034       653,054  37.5  --
   Credit card receivables            573,248       541,151   5.9  +
   Real estate construction           397,686       347,262  14.5  +
   Nonaccrual - Regional
      Banking Group                     8,437        11,671  27.7  --
   Nonaccrual - Mortgage
      Banking                          19,220        26,155  26.5  --
                                  -----------   -----------
       Total loans, net of
        unearned income (g)         8,315,716     8,082,274   2.9  +
Investment securities               1,956,927     2,098,281   6.7  --
REMIC securities (g)                  637,863             -     -
Mortgage loans held for sale        2,841,957     1,033,648 174.9  +
Other earning assets                  534,777       557,021   4.0  --
                                  -----------   -----------
       Total earning assets        14,287,240    11,771,224  21.4  +
Cash and due from banks               726,605       730,013    .5  --
Other assets                        2,234,164     1,581,210  41.3  +
                                  -----------   -----------
       Total assets               $17,248,009   $14,082,447  22.5  +
                                  ===========   ===========

Certificates of deposit under
   $100,000 and other time        $ 2,535,356   $ 2,790,609   9.1  --
Other interest-bearing deposits     3,719,061     3,282,951  13.3  +
                                  -----------   -----------
       Total interest-bearing
        core deposits               6,254,417     6,073,560   3.0  +
Certificates of deposit
   $100,000 and more                2,129,984       837,047 154.5  +
Short-term borrowed funds           3,472,743     2,641,693  31.5  +
Term borrowings                       266,468       180,343  47.8  +
                                  -----------   -----------
       Total interest-bearing
        liabilities                12,123,612     9,732,643  24.6  +
Demand deposits                     1,840,041     1,761,046   4.5  +
Other noninterest-bearing
   deposits                           876,047       585,417  49.6  +
Other liabilities                   1,257,096       994,858  26.4  +
Qualifying capital securities (h)     100,000       100,000     -
Shareholders' equity                1,051,213       908,483  15.7  +
                                  -----------   ----------
       Total liabilities and
            shareholders' equity  $17,248,009   $14,082,447  22.5  +
                                  ===========   ===========

(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)        3Q98       2Q98       1Q98       4Q97       3Q97
---------------  --------   --------   --------   --------   --------
ALLOWANCE FOR
 LOAN LOSSES:
 Beginning
  Reserve        $129,858   $130,026   $125,859   $123,875   $123,458
 Provision         13,127     12,785     13,515     13,332     12,753
 Securitization
  adjustment            -     (3,575)         -          -          -
 Allowance from
  acquisition         140          -          -          -          -
 Charge-offs      (11,472)   (11,739)   (12,376)   (16,141)   (14,521)
 Loan recoveries    3,760      2,361      3,028      4,793      2,185
                 --------   --------   --------   --------   --------
  Ending Balance $135,413   $129,858   $130,026   $125,859   $123,875
                 ========   ========   ========   ========   ========

NONPERFORMING ASSETS:
 Nonperforming
  loans           $ 8,437    $ 8,281   $ 10,914    $ 9,405   $ 11,671
 Foreclosed real
  estate            4,703      4,323      4,294      4,499      4,971
 Other assets         207        214        225        235        221
                 --------   --------   --------   --------   --------
  Total Regional
   Banking Group   13,347     12,818     15,433     14,139     16,863
                 --------   --------   --------   --------   --------
 Mortgage Banking
  nonperforming
  loans            19,220     12,981     29,283     29,010     26,155
 Mortgage Banking
  foreclosed real
  estate           10,810     16,600      7,281      7,703      7,381
                 --------   --------   --------   --------   --------
  Total
   nonperforming
   assets        $ 43,377   $ 42,399   $ 51,997   $ 50,852   $ 50,399
                 ========   ========   ========   ========   ========
Loans and leases
 past due 90 days
 or more         $ 34,012   $ 27,192   $ 29,062   $ 32,074   $ 30,298

                                  T-9

                 FIRST TENNESSEE NATIONAL CORPORATION
                       ASSET QUALITY HIGHLIGHTS
                              (Unaudited)

                   3Q98       2Q98       1Q98       4Q97       3Q97
                 --------   --------   --------   --------   --------
TOTAL FIRST TENNESSEE:
Nonperforming
 loans ratio (i)      .33%       .27%       .47%       .46%       .47%
Nonperforming
 assets ratio (j)     .52        .53        .61        .61        .62
Allowance to
 total loans         1.63       1.63       1.53       1.51       1.53
Allowance to
 nonperforming
 loans             489.62     610.75     323.47     327.63     327.49
Allowance to
 nonperforming
 assets            312.18     306.28     250.06     247.50     245.79
Net charge-off
 ratio (k)            .38        .47        .45        .56        .62

REGIONAL BANKING GROUP:
Nonperforming
 loans ratio (i)      .11%       .11%       .13%       .12%       .15%
Nonperforming
 assets ratio (j)     .17        .17        .19        .17        .21
Allowance to
 total loans         1.64       1.65       1.53       1.51       1.51
Allowance to
 nonperforming
 loans           1,550.99   1,522.28   1,152.00   1,294.58   1,027.68
Allowance to
 nonperforming
 assets            980.42     983.46     814.68     861.13     711.26

(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)


                           3Q98     2Q98     1Q98     4Q97     3Q97
------------------------  ------   ------   ------   ------   ------

REGIONAL BANKING GROUP
 Yields on earning assets   8.23 %   8.23 %   8.25 %   8.30 %   8.29 %
 Rates paid on
  interest-bearing
  liabilities               4.38     4.40     4.51     4.54     4.55
                          ------   ------   ------   ------   ------
 Net interest spread        3.85     3.83     3.74     3.76     3.74
                          ------   ------   ------   ------   ------
 Effect of interest-free
  sources                    .89      .90      .90      .95      .89
 Loan fees                   .13      .13      .13      .10      .11
                          ------   ------   ------   ------   ------
  Net interest margin-
    REGIONAL BANKING GROUP  4.87 %   4.86 %   4.77 %   4.81 %   4.74 %
MORTGAGE BANKING            (.95)    (.88)    (.61)    (.48)    (.38)
CAPITAL MARKETS             (.20)    (.13)    (.13)    (.13)    (.14)
TRANSACTION PROCESSING       .03      .01       -        -       .02
                          ------   ------   ------   ------   ------
  Net interest margin       3.75 %   3.86 %   4.03 %   4.20 %   4.24 %
                          ======   ======   ======   ======   ======

                                 T-11

                 FIRST TENNESSEE NATIONAL CORPORATION
                          CAPITAL HIGHLIGHTS
       (Dollars in millions except per share amounts, Unaudited)

                       3Q98      2Q98      1Q98      4Q97      3Q97
-----------------    --------- --------- --------- --------- ---------
Tier 1 Capital (l)     $ 998.7   $ 944.2   $ 952.1   $ 938.5   $ 890.1
Tier 2 Capital (l)       384.1     378.5     378.5     275.1     273.1
                     --------- --------- --------- --------- ---------
  Total Capital (l)  $ 1,382.8 $ 1,322.7 $ 1,330.6 $ 1,213.6 $ 1,163.2
                     ========= ========= ========= ========= =========

Risk-Adjusted
  Assets (l)         $12,606.0 $11,699.7 $11,196.3 $10,418.1 $10,471.7

Tier 1 Ratio (l)          7.95%     8.07%     8.50%     9.01%     8.50%
Tier 2 Ratio (l)          3.05      3.24      3.38      2.64      2.61
                     --------- --------- --------- --------- ---------
  Total Capital
       Ratio (l)         11.00%    11.31%    11.88%    11.65%    11.11%
                     ========= ========= ========= ========= =========

Leverage Ratio (l)        6.00%     5.91%     6.44%     6.83%     6.66%

Shareholders' Equity/Assets
        Ratio (m)         5.96      5.91      6.41      6.60      6.55

Total Capital (n)/Assets
        Ratio (m)         6.55      6.53      7.08      7.32      7.29

Book Value              $ 8.19    $ 7.70    $ 7.63    $ 7.44    $ 7.09


(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)

                   3Q98       2Q98       1Q98       4Q97       3Q97
                 --------   --------   --------   --------   --------
REGIONAL BANKING
 GROUP
----------------
Total Revenues   $173,054   $168,205   $159,534   $162,510   $159,837
Loan Loss
 Provision         11,174     11,689     12,460     11,839     11,753
Operating
 Expenses         102,713     98,509     91,737     93,064     88,050
                 --------  ---------   --------   --------   --------
 Pre-Tax Income   $59,167    $58,007    $55,337    $57,607    $60,034

  RETAIL/
  COMMERCIAL BANK
  ---------------
  Total Revenues $145,157   $139,442   $132,816   $135,352   $133,352
  Loan Loss
   Provision        6,113      6,144      6,391      5,623      5,638
  Operating
   Expenses        88,136     84,056     78,007     81,057     75,444
                 --------   --------   --------   --------   --------
    Pre-Tax
     Income       $50,908    $49,242    $48,418    $48,672    $52,270

  CREDIT CARD
  -----------
  Total Revenues  $15,286    $15,415    $14,984    $15,471    $15,572
  Loan Loss
   Provision        5,061      5,545      6,069      6,216      6,115
  Operating
   Expenses         6,076      5,919      5,821      5,161      5,641
                  -------  ---------  ---------  ---------  ---------
    Pre-Tax Income $4,149     $3,951     $3,094     $4,094     $3,816

  KEY STATISTICS:
  Outstandings     $573.2     $561.0     $551.1     $581.5     $541.2
  Net Charge-offs /
    Average Loans   3.52%      4.12%      4.29%      4.59%      4.54%

  TRUST SERVICES
  --------------
  Total Revenues  $12,611    $13,348    $11,734    $11,687    $10,913
  Operating
   Expenses         8,501      8,534      7,909      6,846      6,965
                 --------  ---------  ---------  ---------  ---------
    Pre-Tax Income $4,110     $4,814     $3,825     $4,841     $3,948

  KEY STATISTICS:
  Managed Assets (o)
   (FTBNA)       $8,183.4   $8,490.0   $8,256.9   $6,558.1   $6,383.9

(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)


                   3Q98      2Q98       1Q98       4Q97       3Q97
                 -------- ---------- ---------- ---------- ----------
MORTGAGE BANKING
----------------
Total Revenues   $172,945   $135,580   $102,352   $110,514    $96,314
Loan Loss
 Provision          1,953      1,097      1,055      1,493      1,001
Operating
 Expenses         144,671    119,186     95,357     83,986     77,917
                --------- ---------- ---------- ---------- ----------
  Pre-Tax Income  $26,321    $15,297     $5,940    $25,035    $17,396

   Key Statistics
   (in millions):
   Origination
    Volume       $5,636.3   $4,862.4   $4,676.7   $3,255.6   $3,028.9
   Servicing
    Portfolio   $35,292.6  $32,147.5  $29,452.0  $26,928.6  $25,672.2

CAPITAL MARKETS
---------------
Total Revenues    $36,467    $31,201    $39,210    $29,757    $29,650
Operating
 Expenses          26,625     23,456     27,832     21,217     21,419
                --------- ---------- ---------- ---------- ----------
  Pre-Tax
   Income          $9,842     $7,745    $11,378     $8,540     $8,231

   Key Statistics
   (in millions):
   Total Securities
    Bought/
    Sold       $109,140.5  $95,197.4  $84,697.7  $70,258.2  $63,041.6
   Total
     Under-
     writings   $12,789.3   $7,129.5  $11,280.5   $9,753.0   $8,466.5

TRANSACTION
 PROCESSING
--------------
Total Revenues    $21,101    $18,222    $17,029    $18,677    $19,241
Operating
 Expenses          16,667     15,190     13,951     14,266     14,680
               ---------- ---------- ---------- ---------- ----------
  Pre-Tax
   Income          $4,434     $3,032     $3,078     $4,411     $4,561

   Key Statistics
   (in thousands):
   Merchant
     Transactions
     Processed   42,650.9   39,111.3   33,210.3   33,028.8   34,323.9
   MONEY BELT
     Transactions
     Processed
     (correspon-
      dent)       7,060.4    6,553.5   5,335.6     5,396.9    5,232.3
   First Express
     Transactions
     Processed   65,771.1   64,372.4   59,093.3   58,267.4   69,134.6

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.


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