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First Horizon (First Horizon) Probability of Financial Distress (%) : 0.08% (As of Jun. 17, 2024)


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What is First Horizon Probability of Financial Distress (%)?

Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, First Horizon's Probability of Financial Distress (%) is 0.08%.

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


Competitive Comparison of First Horizon's Probability of Financial Distress (%)

For the Banks - Regional subindustry, First Horizon's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


First Horizon's Probability of Financial Distress (%) Distribution in the Banks Industry

For the Banks industry and Financial Services sector, First Horizon's Probability of Financial Distress (%) distribution charts can be found below:

* The bar in red indicates where First Horizon's Probability of Financial Distress (%) falls into.



First Horizon Probability of Financial Distress (%) Calculation

Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.

The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:

LPFD= -20.12 * NIMTAAVG + 1.60 * TLMTA - 7.88 * EXRETAVG + 1.55 * SIGMA - 0.005 * RSIZE - 2.27 * CASHMTA + 0.070 * MB - 0.09 * PRICE -8.87
=-7.19

The Probability of Financial Distress (%) (PFD) was then obtianed by:

PFD=1/(1 + e^(-LPFD))*100%
=0.08%

The eight explanatory variables are:

1. NIMTAAVG = Net Income to Market Total Assets

NIMTAAVG=Net Income / Market Total Assets
=Net Income / (Market Cap + Total Liabilities)

*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.

2. TLMTA = Total liabilities to Market Total Assets

TLMTA=Total Liabilities / Market Total Assets

3. CASHMTA = Cash to Market Total Assets

For banks, CASHMTA is measured as:


4. EXRETAVG = Excess Return compared to the S&P 500

EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.

5. SIGMA = Standard Deviation of Daily Returns

For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).

6. RSIZE = Relative Size

RSIZE=log (Market Cap / Total Market Cap of S&P 500 companies)

7. MB = Market to Adjusted Book Equity Ratio


8. PRICE

PRICE is measured as the log of the stock price, capped at log(15).


First Horizon  (NYSE:FHN) Probability of Financial Distress (%) Explanation

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk in the upcoming year. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


First Horizon Probability of Financial Distress (%) Related Terms

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First Horizon (First Horizon) Business Description

Industry
Address
165 Madison Avenue, Memphis, TN, USA, 38103
First Horizon Corp is the parent company of First Tennessee Bank, a prominent regional bank with about 200 branches around Tennessee. The regional bank is responsible for roughly 65% of its revenue, while capital markets make a 25% contribution. The remainder is split between the firm's non-strategic (wind-down) and corporate operations. First Horizon concentrates on offering a variety of banking products mainly in its home state, where it has the second- largest deposit franchise with a 13% deposit market share.
Executives
Velia Carboni director 165 MADISON AVE, MEMPHIS TN 38103
William H Fenstermaker director 200 WEST CONGRESS STREET, LAFAYETTE LA 70501
Vicki R Palmer director PO BOX 723040, ATLANTA GA 30339
Rosa Sugranes director 2975 N.W. 77TH AVE, DORAL FL 33132
Reed Colin V director
Wendy P Davidson director 2210 WEST OAKLAWN DRIVE, SPRINGDALE AR 72762
D Bryan Jordan officer: EVP and CFO
Terry Lawson Akins officer: Sr. EVP, Chief Risk Officer 200 WEST CONGRESS STREET, LAFAYETTE LA 70501
David T Popwell officer: EVP-Regional Bkg & Bkg COO 165 MADISON AVENUE, MEMPHIS TN 38103
Tammy Locascio officer: Sr. EVP, Chief HR Officer 165 MADISON AVE, MEMPHIS TN 38103
Daryl G Byrd director, officer: Executive Chairman of Board 200 WEST CONGRESS STREET, LAFAYETTE LA 70501
Anthony J Restel officer: SEVP Chief Operating Officer 200 WEST CONGRESS STREET, LAFAYETTE LA 70501
Hope Dmuchowski officer: Sr. EVP & CFO 165 MADISON AVE, MEMPHIS TN 38103
Losch William C Iii officer: EVP and CFO 165 MADISON AVENUE, MEMPHIS TN 38103
Elizabeth A Ardoin officer: SEVP, Chief Communications Ofc 200 WEST CONGRESS STREET, LAFAYETTE LA 70501