EX-99 2 exhibit991.htm EXHIBIT 99.1

Exhibit 99.1


FOURTH QUARTER 2005
FINANCIAL SUPPLEMENT

The following supplement is provided to assist in your financial analysis. 

If you need further information, please contact: 

Mark Yates, SVP
Investor Relations
901/523-4068
myates@firsthorizon.com

CONSOLIDATED SUMMARY
Quarterly, Unaudited
(Thousands)  4Q05   3Q05   2Q05   1Q05   4Q04 
Net interest income $254,811  $260,161  $241,608  $227,447  $228,446 
Noninterest income 336,586  369,943  343,312  343,464  313,682 
Divestitures         7,029                 -                 -                 -          3,200 
Security G/L (181) (406) 75  (66) (3,734)
Total revenue 598,245  629,698  584,995  570,845  541,594 
Noninterest expense   420,827  436,219  419,031  394,855  382,688 
Provision 16,175  22,608  15,786  13,109  11,783 
Pretax income 161,243  170,871  150,178  162,881  147,123 
Income taxes 48,256  54,674  47,473  53,672  43,971 
Income before cumulative effect 112,987  116,197  102,705  109,209  103,152 
Cumulative effect of changes in accounting      
     principle, net of tax (3,098)                -                 -                 -                 - 
Net income $109,889  $116,197  $102,705  $109,209  $103,152 
       
Diluted shares 129,476  129,359  128,914  128,032  127,719 
EPS before cumulative effect of changes in      
     accounting principle $0.87  $0.90  $0.80  $0.85  $0.81 
EPS $0.85  $0.90  $0.80  $0.85  $0.81 
Tax rate 30% 32% 32% 33% 30%
Efficiency ratio 70% 69% 72% 69% 71%
                 
Certain previously reported amounts have been reclassified to agree with current presentation.

1


STATEMENTS OF INCOME
Quarterly, Unaudited
(Thousands)  4Q05   3Q05   2Q05   1Q05   4Q04 
Interest income $519,474  $497,439  $438,385  $384,876  $334,789 
Less interest expense 264,663  237,278  196,777  157,429  106,343 
  Net interest income 254,811  260,161  241,608  227,447  228,446 
Provision for loan losses 16,175  22,608  15,786  13,109  11,783 
  Net interest income after    
  provision for loan losses   238,636  237,553  225,822  214,338  216,663 
Noninterest income:    
  Mortgage banking 114,713  140,482  108,993  118,762  94,771 
  Capital markets 80,896  82,158  94,789  95,162  76,522 
  Deposit transactions    
  and cash management 42,196  41,268  39,471  33,255  37,695 
  Merchant processing 22,202  22,680  23,239  20,460  19,679 
  Insurance commissions 13,144  12,673  13,525  14,749  11,649 
  Revenue from loan sales and securitizations 13,146  10,878  10,319  13,232  14,151 
  Trust services and investment    
  management 10,873  11,299  11,278  11,164  11,741 
  Gains on divestitures       7,029               -               -               -        3,200 
  Securities (losses)/gains, net (181) (406) 75  (66) (3,734)
  Other 39,416  48,505  41,698  36,680  47,474 
Total noninterest income 343,434  369,537  343,387  343,398  313,148 
  Adjusted gross income after    
  provision for loan losses 582,070  607,090  569,209  557,736  529,811 
Noninterest expense:    
  Employee compensation,    
  incentives and benefits 245,224  261,906  248,064  242,986  228,206 
  Occupancy 28,427  26,547  26,548  24,516  22,875 
  Operations services 20,086  20,660  20,328  18,477  18,379 
  Equipment rentals, depreciation,    
  and maintenance 19,958  19,668  19,406  18,085  18,633 
  Communications and courier 14,720  14,809  13,684  12,893  12,446 
  Amortization of intangible assets 3,414  3,598  3,360  3,362  3,014 
  Other 88,998  89,031  87,641  74,536  79,135 
Total noninterest expense 420,827  436,219  419,031  394,855  382,688 
Pretax income 161,243  170,871  150,178  162,881  147,123 
  Provision for income taxes 48,256  54,674  47,473  53,672  43,971 
Income before cumulative effect of changes    
     in accounting principle 112,987  116,197  102,705  109,209  103,152 
Cumulative effect of changes in accounting    
     principle, net of tax (3,098)              -               -               -               - 
Net income $109,889  $116,197  $102,705  $109,209  $103,152 
                 
Diluted earnings per common share before      
     cumulative effect of changes in       
     accounting principle $        .87  $        .90  $        .80  $        .85  $        .81 
Diluted earnings per common share        .85         .90         .80         .85         .81 
Dividends declared        .45         .43         .43         .43         .43 
       
SELECTED FINANCIAL RATIOS:      
Return on average assets 1.16% 1.21% 1.14% 1.30% 1.40%
Return on average shareholders' equity       19.4          21.1          19.6          21.8          20.8   
Certain previously reported amounts have been reclassified to agree with current presentation.

2


OTHER INCOME AND OTHER EXPENSE
Quarterly, Unaudited
(Thousands)  4Q05   3Q05   2Q05   1Q05   4Q04 
All other income:    
Cardholder fees $7,486  $7,070  $6,733  $6,092  $6,405 
Other service charges            5,531  5,968  5,753  5,218  5,270 
Remittance processing            3,926  3,908  3,790  3,787  3,888 
Check clearing fees            1,801  1,885  1,778  1,869  2,340 
Other           20,672  29,674  23,644  19,714  29,571 
Total      $39,416   $48,505  $41,698  $36,680  $47,474 
All other expense:    
Advertising and public relations $11,082  $11,254  $12,518  $11,535  $8,585 
Legal and professional fees           12,222  12,439  11,829  8,749  11,816 
Travel and entertainment            8,062  7,721  8,898  7,445  8,684 
Computer software            8,452  8,333  8,845  7,024  7,199 
Contract employment            7,818  7,913  8,631  6,700  7,877 
Supplies            4,499  4,737  4,040  4,360  4,399 
Fed services fees            1,852  1,885  1,905  1,926  1,979 
Foreclosed real estate             1,835  3,547  (614) 2,497  2,759 
Deposit insurance premium               782  795  746  689  923 
Charitable contributions               419  950  460  374  339 
Other               31,975  29,457  30,383  23,237  24,575 
Total     $88,998  $89,031  $87,641  $74,536  $79,135 
Certain previously reported amounts have been reclassified to agree with current presentation.

3


AVERAGE STATEMENTS OF CONDITION
Quarterly, Unaudited
(Millions)  4Q05  3Q05 2Q05 1Q05 4Q04
Assets:    
Earning assets:    
  Loans, net of unearned income $19,952.1  $18,722.0  $17,782.3  $16,680.6  $16,836.4 
  Investment securities 2,858.4  2,934.1  2,931.3  2,794.8  2,150.6 
  Loans held for sale 5,758.8  6,936.8  6,055.9  5,315.1  4,696.1 
  Capital markets securities inventory 2,160.7  2,158.3  2,069.1  2,235.0  856.9 
  Mortgage banking trading securities 360.9  271.9  292.3  288.4  249.5 
  Other earning assets:    
  Federal funds sold and securities     
     purchased under agreements to resell 2,086.4  2,532.7  2,482.6  2,047.3  783.7 
  Investment in bank time deposits 14.5  6.3  5.7  5.9  5.6 
     Total other earning assets 2,100.9  2,539.0  2,488.3  2,053.2  789.3 
    Total earning assets 33,191.8  33,562.1  31,619.2  29,367.1  25,578.8 
Allowance for loan losses (190.8) (176.2) (169.4) (164.6) (165.2)
Cash and due from banks 781.2  769.8  727.4  729.8  779.2 
Premises and equipment, net 410.4  400.5  387.5  378.0  373.7 
Capital markets receivables 288.3  393.5  742.2  880.5  153.4 
Other assets 3,239.5  3,141.3  2,975.3  2,900.6  2,590.0 
  Total assets $37,720.4  $38,091.0  $36,282.2  $34,091.4  $29,309.9 
     
Liabilities and shareholders' equity:    
Interest-bearing deposits:    
  Savings $  285.3  $  289.7  $  294.4  $  294.1  $  292.6 
  Checking interest and money market 4,409.6  4,287.2  4,319.5  4,273.7  3,935.8 
  Certificates of deposit under $100,000    
    and other time 2,402.9  2,278.1  2,184.3  2,102.4  2,065.8 
     Total interest-bearing core deposits 7,097.8  6,855.0  6,798.2  6,670.2  6,294.2 
Noninterest-bearing deposits 5,427.9  5,659.0  5,167.4  4,786.7  4,913.7 
  Total core deposits 12,525.7  12,514.0  11,965.6  11,456.9  11,207.9 
Certificates of deposit $100,000 and more 11,393.0  11,467.8  10,557.3  10,147.1  8,079.0 
  Total deposits 23,918.7  23,981.8  22,522.9  21,604.0  19,286.9 
Federal funds purchased and securities    
  sold under agreements to repurchase 4,760.6  4,913.3  4,651.6  3,991.2  3,731.0 
Trading liabilities 1,351.8  1,665.3  1,589.4  1,470.5  614.8 
Commercial paper and other short-term    
  borrowings 1,052.3  1,230.4  998.8  691.0  161.0 
Term borrowings 2,665.9  2,374.6  2,585.2  2,616.1  2,385.1 
Capital markets payables 275.7  350.5  423.8  569.8  124.0 
Other liabilities 1,150.5  1,093.6  1,115.4  1,083.4  1,033.4 
Preferred stock of subsidiary 295.3  295.3  295.4  30.0         .5 
Shareholders' equity 2,249.6  2,186.2  2,099.7  2,035.4  1,973.2 
    Total liabilities and shareholders' equity $37,720.4  $38,091.0  $36,282.2  $34,091.4  $29,309.9 

4


PERIOD END STATEMENTS OF CONDITION
Quarterly, Unaudited
(Millions)  4Q05  3Q05 2Q05 1Q05 4Q04 
Assets:    
Cash and due from banks $946.4  $1,037.4  $989.9  $773.4  $638.2 
Federal funds sold and securities    
   purchased under agreements to resell     1,485.2      1,972.3      1,911.0      1,599.0        682.3 
  Total cash and cash equivalents     2,431.6      3,009.7      2,900.9      2,372.4      1,320.5 
Investment in bank time deposits         10.7            6.4            5.2          10.7            5.3 
Trading securities     2,133.4      2,013.5      2,064.5      1,826.6        988.0 
Loans held for sale     4,435.3      5,158.1      5,795.5      5,277.2      5,168.0 
Securities available for sale     2,912.1      2,841.6      2,998.1      2,899.5      2,680.6 
Securities held to maturity             .4              .4              .4              .4              .4 
Loans, net of unearned income   20,600.9    19,212.1    18,428.6    17,183.8    16,427.7 
  Less: Allowance for loan losses       189.7        185.0        169.7        164.2        158.2 
  Total net loans   20,411.2  19,027.1  18,258.9  17,019.6  16,269.5 
Capital markets receivables 511.5  1,453.4  1,694.7  2,435.5  276.3 
Mortgage servicing rights, net 1,314.6  1,210.3  1,018.0  1,135.6  1,036.4 
Goodwill 308.8  309.5  292.1  287.9  187.2 
Other intangible assets, net 85.9  86.9  86.5  89.6  34.8 
Premises and equipment, net 415.0  412.0  391.1  384.5  379.4 
Real estate acquired by foreclosure 27.4  27.8  27.1  25.7  27.8 
Other assets 1,581.2  1,485.6  1,632.8  1,392.2  1,397.5 
  Total assets $36,579.1  $37,042.3  $37,165.8  $35,157.4  $29,771.7 
     
Liabilities and shareholders' equity:    
Deposits:    
  Savings $279.4  $288.9  $290.3  $299.0  $289.8 
  Checking interest and money market 4,425.7  4,331.6  4,231.8  4,338.5  4,220.4 
  Certificates of deposit under $100,000    
    and other time 2,478.9  2,338.4  2,223.5  2,145.3  2,061.2 
  Total interest-bearing core deposits 7,184.0  6,958.9  6,745.6  6,782.8  6,571.4 
  Noninterest-bearing deposits 5,322.1  5,891.5  5,949.6  5,508.6  4,994.6 
       Total core deposits 12,506.1  12,850.4  12,695.2  12,291.4  11,566.0 
  Certificates of deposit $100,000 and more 10,931.7  12,497.2  8,962.7  10,781.0  8,216.2 
          Total deposits 23,437.8  25,347.6  21,657.9  23,072.4  19,782.2 
Federal funds purchased and securities    
  sold under agreements to repurchase 3,735.7  2,358.0  5,459.0  2,788.2  3,247.0 
Trading liabilities       793.6  906.6  1,192.0  924.0  426.3 
Commercial paper and other short-term    
  borrowings       802.0      1,217.9      1,172.6        967.7        139.8 
Term borrowings     3,437.6      2,000.1      2,537.0      2,591.4      2,616.4 
Capital markets payables       591.4      1,507.6      1,519.1      1,283.8        390.3 
Other liabilities     1,173.4      1,151.3      1,149.6      1,141.4      1,128.2 
  Total liabilities   33,971.5    34,489.1    34,687.2    32,768.9    27,730.2 
Preferred stock of subsidiary       295.3        295.3        295.3        295.8              .5 
Shareholders' equity:    
Common stock         78.9          78.7          78.2          77.6          77.2 
Capital surplus       267.7        259.0        228.5        196.5        173.9 
Undivided profits     2,016.0      1,962.8      1,900.8      1,851.8      1,795.8 
Accumulated other comprehensive loss, net        (42.3)        (33.6)        (13.7)        (36.2)          (9.9)
Deferred compensation on incentive plans        (20.1)        (21.1)        (22.6)          (9.1)          (8.2)
Deferred compensation obligation 12.1  12.1  12.1  12.1  12.2 
  Total shareholders' equity 2,312.3  2,257.9  2,183.3  2,092.7  2,041.0 
Total liabilities and shareholders' equity $36,579.1  $37,042.3  $37,165.8  $35,157.4  $29,771.7 

5


AVERAGE AND PERIOD-END LOANS
Quarterly, Unaudited
(Millions)  4Q05  3Q05 2Q05 1Q05 4Q04 
Average loans:    
Loans, net of unearned income:    
  Commercial:    
  Commercial, financial and industrial $  6,357.0  $  6,176.2  $  5,894.5  $  5,480.1  $  5,213.6 
  Real estate commercial 1,208.9  1,163.2  1,086.3  1,004.5  929.7 
    Real estate construction 1,973.1  1,735.9  1,546.2  1,306.0  1,132.1 
   Total commercial loans 9,539.0  9,075.3  8,527.0  7,790.6  7,275.4 
  Retail:    
  Real estate residential 8,123.6  7,593.7  7,533.5  7,385.8  8,204.5 
  Real estate construction 1,874.8  1,643.9  1,321.2  1,105.4  939.8 
  Other retail 170.5  167.5  161.1  160.7  172.6 
    Credit card receivables 244.2  241.6  239.5  238.1  244.1 
     Total retail loans 10,413.1  9,646.7  9,255.3  8,890.0  9,561.0 
  Total loans, net of unearned income $19,952.1  $18,722.0  $17,782.3  $16,680.6  $16,836.4 
     
       
     
Period-end loans:    
Loans, net of unearned income:    
  Commercial:    
  Commercial, financial and industrial $  6,578.1  $  6,354.8  $  6,181.6  $  5,781.3  $  5,560.7 
  Real estate commercial 1,213.1  1,171.6  1,128.2  1,030.1  960.2 
    Real estate construction 2,108.1  1,849.1  1,662.8  1,428.0  1,208.7 
   Total commercial loans 9,899.3  9,375.5  8,972.6  8,239.4  7,729.6 
  Retail:    
  Real estate residential 8,357.1  7,603.3  7,549.9  7,358.9  7,244.7 
  Real estate construction 1,925.1  1,814.6  1,499.5  1,190.1  1,035.6 
  Other retail 168.4  170.7  163.8  160.5  168.8 
    Credit card receivables 251.0  248.0  242.8  234.9  249.0 
     Total retail loans 10,701.6  9,836.6  9,456.0  8,944.4  8,698.1 
    Total loans, net of unearned income $20,600.9  $19,212.1  $18,428.6  $17,183.8  $16,427.7 

6


RETAIL/COMMERCIAL BANKING 
Quarterly, Unaudited 
(Thousands)   4Q05    3Q05    2Q05    1Q05    4Q04  
Net interest income  $227,229  $224,264  $210,327  $197,267  $193,380 
Noninterest income  129,117       129,503  123,104  121,379  127,466 
Divestitures          7,029                 -                 -                 -          3,200 
Security G/L                 -                 -                 -                 -               (1)
Total revenue       363,375       353,767       333,431  318,646  324,045 
Total noninterest expense       214,006       212,403       207,800       192,868       196,836 
Provision  15,897  22,428  15,667  13,069  11,798 
Pretax income    $133,472  $118,936  $109,964  $112,709  $115,411 
                 
Efficiency ratio  59% 60% 62% 61% 61%
       
Average loans (millions)  $19,799  $18,613  $17,700  $16,622  $16,792 
Other earning assets (millions)  1,712  2,250  1,844  1,774  1,124 
  Total earning assets (millions)  $21,511  $20,863  $19,544  $18,396  $17,916 
       
Total deposits  $11,394  $10,916  $10,606  $10,384  $9,975 
       
Net interest margin  4.19% 4.26% 4.32% 4.35% 4.29%
       
Noninterest revenue detail       
Deposit transactions & cash mgmt  $42,191  $41,298  $39,440  $33,254  $37,694 
Merchant processing  22,208  22,685  23,243  20,465  19,683 
Insurance commissions  12,693  12,236  13,085  14,287  11,206 
Trust services & investment mgmt  10,873  11,300  11,278  11,164  11,741 
Cardholder fees  7,274  6,836  6,529  5,922  6,252 
Other service charges  5,078  5,367  5,219  4,806  4,900 
Check clearing fees  1,801  1,885  1,778  1,869  2,340 
Revenue from loan sales and       
   securitizations (a)  10,630  8,638  8,386  11,114  14,151 
Miscellaneous revenue  16,369  19,258  14,146  18,498  19,499 
Total noninterest revenue  $129,117  $129,503  $123,104  $121,379  $127,466 
       
Statistics       
Trust total assets (millions)(b)   $12,025  $12,451  $12,208  $12,164  $12,228 
Trust total managed assets (millions)(b)  6,761  6,984  7,158  7,204  7,608 
Merchant transactions  45,315  46,164  46,309  42,701  39,347 
(a)  Includes gains from whole-loan sales and net revenue from asset securitizations   
(b)  Current quarter is an estimate 
Certain previously reported amounts have been reclassified to agree with current presentation. 

7


MORTGAGE BANKING 
Quarterly, Unaudited 
(Thousands)   4Q05   3Q05    2Q05    1Q05    4Q04  
Net interest income  $34,497  $41,688  $37,601  $32,957  $38,858 
Noninterest income:      
  Net origination fees  87,545  115,541  95,676  99,964  76,567 
  Net servicing fees  20,175  17,951  6,295  13,765  15,382 
  Other fees  12,182  17,762  15,769  8,846  9,901 
Total noninterest income  119,902  151,254  117,740  122,575  101,850 
Total revenue  154,399  192,942  155,341  155,532  140,708 
Noninterest expense  113,763  131,031  112,568  108,630  105,451 
Provision             278             180             119               40              (15)
Pretax income  $40,358  $61,731  $42,654  $46,862  $35,272 
         
Noninterest expense detail       
Commissions & incentives  $62,946  $84,774  $77,400  $57,718  $64,845 
FAS 91 cost deferral  4,813  4,616  (1,332) (2,574) (6,315)
Other salaries & benefits  57,222  60,017  58,949  56,640  61,364 
  Total salaries & benefits  124,981  149,407  135,017  111,784  119,894 
Contract labor & outsourcing  4,938  5,059  5,296  4,456  4,688 
Equipment & occupancy  17,633  16,554  16,786  15,600  16,837 
Foreclosure provision  1,264  3,063  (647) 2,414  2,418 
Other expenses  42,399  50,015  46,014  42,825  32,792 
Total expenses before FAS 91 reclass  191,215  224,098  202,466  177,079  176,629 
FAS 91 reclassification  (82,257) (97,429) (92,667) (70,808) (74,881)
Total noninterest expense before       
  segment allocations  108,958  126,669  109,799  106,271  101,748 
Segment allocations  4,805  4,362  2,769  2,359  3,703 
 Total noninterest expense   $113,763  $131,031  $112,568  $108,630  $105,451 
       
Other information       
Efficiency ratio  74% 68% 72% 70% 75%
       
Warehouse (millions)  $3,854  $4,583  $4,081  $3,522  $3,543 
Other earning assets (millions)  453  394  391  343  318 
  Total earning assets (millions)  $4,307  $4,977  $4,472  $3,865  $3,861 
       
Escrow balances  $2,034  $2,334  $2,054  $1,724  $1,779 
       
Net interest margin  3.18% 3.32% 3.37% 3.46% 4.00%
       
Warehouse Spread  2.06% 2.33% 2.66% 2.89% 3.58%
                 
Certain previously reported amounts have been reclassified to agree with current presentation. 

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MORTGAGE BANKING
Quarterly, Unaudited
(Thousands)    4Q05   3Q05   2Q05   1Q05   4Q04 
ORIGINATION INCOME      
Origination Fees $79,808  $104,395  $97,468  $76,050  $79,235 
FAS 91 Fee Deferral         4,932          4,846         (3,774)           (939)        (3,192)
Appraisal, Final Inspection,       
     Credit Report Fees         7,574          9,639          8,967          6,926          7,142 
  Total origination fees       92,314       118,880       102,661        82,037        83,185 
       
Secondary Marketing Income:      
OMSR        86,168       108,094        80,076        72,948        62,462 
SRP          6,849        14,940        13,629        10,426          7,709 
Marketing G/L (Trading Gains)         21,237        15,165        19,884        27,553        15,605 
Concessions      (35,808)      (39,810)      (27,319)      (21,944)      (15,360)
LOCOM               (958)        (4,299)           (588)           (248)        (2,153)
  Total Secondary Marketing Fees -      
          Mortgage         77,488        94,090        85,682        88,735        68,263 
       
FAS 91 Reclassification      (82,257)      (97,429)      (92,667)      (70,808)      (74,881)
       
Total Origination Income $87,545  $115,541  $95,676  $99,964  $76,567 
       
KEY ORIGINATIONS METRICS      
       
Production ($ in millions):      
  First Lien Production $7,991  $10,557  $9,526  $7,618  $7,840 
       
Refinanced Production          3,259          4,387          3,545          3,588          3,475 
Refinanced % 41% 42% 37% 47% 44%
Purchased Production         4,732          6,170          5,981          4,030          4,365 
Purchased % 59% 58% 63% 53% 56%
       
ARMs % (Excluding Gov't ARMS) 37% 41% 50% 45% 47%
       
Total Sales Force 2,630  2,602  2,629  2,574  2,416 
       
Warehouse/Pipeline Balance:      
Ending Warehouse Balance 2,942  3,159  3,663  3,477  3,420 
Ending Pipeline Balance (Locked)         3,119          3,930          5,209          4,065          3,309 
       
Loan Sales (Deliveries):      
Total Loan Sales         7,890        10,563          8,738          7,380          7,134 
       
Margins:      
Marketing Margin on Deliveries (bps):      
OMSR 109  102  92  99  88 
Marketing G/L (Trading Gains) 27  14  23  37  22 
LOCOM              (1)              (4)              (1)                -               (3)
Concessions/SRP  (37) (23) (16) (16) (11)
Total Marketing Margin on Deliveries 98  89  98  120  96 
               
Certain previously reported amounts have been reclassified to agree with current presentation.

9


MORTGAGE BANKING
Quarterly, Unaudited
     4Q05   3Q05   2Q05   1Q05   4Q04 
(Thousands)   $ bps $ bps $ bps $ bps $ bps
SERVICING INCOME                      
Gross Service Fees $91,735  39 $88,866  38 $87,285  39 $85,908  39 $80,462  38
Guarantee Fees   (18,980) (8)   (18,900) (8)   (19,039) (9)   (19,127) (9)   (18,020) (9)
Sub-Service Fee Income        144   -         101     -           40     -             4     -             2     - 
Lender Paid MI       (168)  -        (145)    -        (159)    -        (121)    -        (143)    - 
  Net Service Fees      72,731  31     69,922  30     68,127  30     66,664  30     62,301  29 
         
Early Payoff Interest Expense     (5,164)  (2)     (6,844)  (3)     (5,742)  (2)     (5,193)  (2)     (5,485)  (2)
Ancillary Fees      6,698  3       6,601  3       6,001  3       6,411  3       5,864  3 
  Total Service Fees      74,265  32     69,679  30     68,386  31     67,882  31     62,680  30 
         
AMORTIZATION/IMPAIRMENT        
Amortization   (48,296)     (47,873)   (45,808)   (46,915)   (41,639)  
Impairment     (1,374)            48    (23,545)   (10,375)     (9,489)  
  Total Amortization/Impairment     (49,670)     (47,825)     (69,353)     (57,290)     (51,128)  
         
HEDGE GAINS        
MSR Hedge Gains/(Losses)        
  NII on SWAPs      5,240         8,703     13,607     18,330     16,382   
  Hedge Ratios      3,014       11,259     16,092     11,013     15,481   
  Other Ineffectiveness     (7,242)     (13,793)   (10,391)   (11,843)   (13,342)  
    Total MSR Hedge Gains/(Losses)      1,012         6,169       19,308       17,500       18,521   
         
Time Decay of MSR Hedges     (2,667)       (9,831)     (9,513)     (9,984)   (12,129)  
         
Hedge MTM & Time Decay:        
  I/O Strip Time Decay       (763)         (367)     (2,092)     (3,257)     (1,874)  
  I/O Strip MTM     (2,002)          126        (441)     (1,086)       (688)  
    Total Hedge MTM & Time Decay     (2,765)         (241)       (2,533)       (4,343)       (2,562)  
Total Hedge Gains       (4,420)       (3,903)        7,262         3,173         3,830   
                       
Total Servicing Income      20,175       17,951         6,295       13,765       15,382   
         
KEY SERVICING METRICS        
($ in millions)        
Avg. Servicing Portfolio (Owned) $94,388    $92,235  $89,366  $87,397  $84,863   
End. Servicing Portfolio (Owned) $95,284    $93,589  $90,823  $88,010  $86,587   
Average Loans Serviced (#)  616,649     610,895   599,361   598,997   583,248   
         
Product Mix (Average)         
Product Mix (%)        
GNMA 9%   9% 10% 11% 12%  
FNMA/FHLMC 65%   67% 68% 69% 69%  
Private   22%   20%   18%   16%   15%  
Sub-Total 96%   96% 96% 96% 96%  
Warehouse 4%   4% 4% 4% 4%  
Total   100%   100%   100%   100%   100%  
         
Other Statistics        
(Annualized)        
Ancillary Income per Loan $43.45    $43.22  $40.05  $42.81  $40.22   
Servicing Cost per Loan $51.74    $51.80  $52.08  $54.12  $56.88   
         
Portfolio Data        
(in millions)        
Average Servicing Asset ** 1,262   1,106 1,062 1,049 971  
Valuation Reserve (Ending Balance) 1   1 6 3 4  
Servicing Book Value (bps) 134   120 119 120 114  
         
Amortization/Average Servicing Asset 15%   17% 17% 18% 17%  
Impairment/Average Servicing Asset 0%   0% 9% 4% 4%  
         
Run-Off Rate 22%   28% 25% 22% 26%  
         
** Includes valuation reserve/MSRs only                  
Certain previously reported amounts have been reclassified to agree with current presentation.

10


CAPITAL MARKETS 
Quarterly, Unaudited 
(Thousands)   4Q05    3Q05    2Q05    1Q05    4Q04  
NII     $ (986) $ (2,595) $ (4,904) $ (556) $ 376 
Incremental cost of equity            (4,919)            (5,231)            (4,586)            (4,623)               - 
Net interest income  (5,905) (7,826) (9,490) (5,179) 376 
Noninterest income:       
  Fixed income  44,397  43,870  50,819  63,020  45,919 
  Other  40,421  42,371  49,399  33,407  34,164 
Total noninterest income  84,818  86,241  100,218  96,427  80,083 
Total revenue  78,913  78,415  90,728  91,248  80,459 
Noninterest expense  75,419  75,910  82,679  81,538  69,527 
Pretax income  $3,494  $2,505  $8,049  $9,710  $10,932 
         
       
Efficiency ratio  96% 97% 91% 89% 86%
       
Trading inventory (millions)  $2,160  $2,158  $2,069  $2,235  $857 
Other earning assets (millions)  2,285  2,512  2,493  1,964  715 
  Total earning assets (millions)  $4,445  $4,670  $4,562  $4,199  $1,572 
       
       
Net interest margin  (0.53)% (0.66)% (0.83)% (0.50)% 0.10%
       
                 
Certain previously reported amounts have been reclassified to agree with current presentation.

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CORPORATE 
Quarterly, Unaudited 
(Thousands)   4Q05    3Q05    2Q05    1Q05    4Q04  
Net interest income  $ (1,010) $ 2,035  $ 3,170  $ 2,402  $ (4,168)
Noninterest income  2,749  2,945  2,250  3,083  4,283 
Security G/L  (181) (406) 75                 (66)            (3,733)
Total revenue  1,558  4,574  5,495  5,419  (3,618)
Total noninterest expense  17,639  16,875  15,984  11,819  10,874 
Pretax income  $ (16,081) $ (12,301) $ (10,489) $ (6,400) $ (14,492)
                 

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CAPITAL HIGHLIGHTS
(Dollars in millions except per share amounts, Unaudited)
     4Q05  3Q05 2Q05 1Q05 4Q04 
Tier 1 Capital (a) $  2,489.3  $  2,430.8  $  2,364.8  $  2,292.3  $  2,080.2 
Tier 2 Capital (a) 1,090.5  1,112.5  1,096.7  1,108.8  1,102.5 
  Total Capital (a) $  3,579.8  $  3,543.3  $  3,461.5  $  3,401.1  $  3,182.7 
     
Risk-Adjusted Assets (a) $29,329.6  $28,225.1  $27,464.8  $25,736.7  $24,140.7 
     
Tier 1 Ratio (a) 8.49% 8.61% 8.61% 8.91% 8.62%
Tier 2 Ratio (a)           3.72              3.94              3.99              4.30              4.56   
  Total Capital Ratio (a) 12.21% 12.55% 12.60% 13.21% 13.18%
     
Leverage Ratio (a) 6.67% 6.45% 6.59% 6.80% 7.16%
     
Shareholders' Equity/Assets Ratio (b)            6.32              6.10              5.87              5.95              6.86   
     
Book Value $ 18.18    $ 17.78    $ 17.32    $ 16.73    $ 16.39   
             
(a)  Current quarter is an estimate
(b)  Calculated on period-end balances

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NET INTEREST MARGIN (NIM) HIGHLIGHTS
(Unaudited)
         4Q05      3Q05     2Q05     1Q05    4Q04
Consolidated Yields and Rates:    
 Investment securities 4.47 % 4.30 % 4.33 % 4.27 % 4.21 %
 Loans, net of unearned        6.72            6.34            5.98            5.63            5.33    
 Loans held for sale        6.48            6.43            6.20            5.95            5.79    
 Capital markets securities inventory        5.02            5.01            4.39            4.39            3.64    
 Mortgage banking trading securities      11.25          12.82          12.63          12.68          12.60    
 Other earning assets        3.61            3.07            2.61            2.15            1.54    
 Yields on earning assets        6.23            5.90            5.56            5.29            5.22    
 Interest-bearing core deposits        2.30            2.13            1.92            1.73            1.56    
 CD's over $100,000        4.06            3.53            3.06            2.59            2.09    
 Fed funds purchased and repos        3.65            3.18            2.71            2.24            1.78    
 Commercial paper and other short-term    
    borrowings        4.40            3.62            3.18            2.68            2.15    
  Capital markets trading liabilities        5.74            5.54            5.20            4.64            3.65    
 Term borrowings        4.77            4.16            3.71            3.18            2.70    
 Rates paid on interest-bearing liabilities        3.71            3.31            2.90            2.49            1.99    
  Net interest spread        2.52            2.59            2.66            2.80            3.23    
 Effect of interest-free sources            .54              .50              .40              .32              .34    
  FHN - NIM   3.06 % 3.09 % 3.06 % 3.12 % 3.57 %
Certain previously reported amounts have been reclassified to agree with current presentation.

14