• Adjusted EPS: $0.42 per share, a $0.01 decrease from the prior quarter.
• Pre-Provision Net Revenue Growth: $16 million increase from the fourth quarter.
• Net Interest Margin Expansion: 9 basis points increase to 3.42%.
• Expense Reduction: $20 million decrease excluding deferred compensation.
• Share Repurchases: $360 million of stock repurchased in the first quarter.
• Charge-Off Ratio: 19 basis points, consistent with 2024 performance.
• Net Interest Income: Increased by $1 million this quarter.
• Fee Income: Decreased by $5 million excluding deferred compensation.
• Provision Expense: Increased by $30 million.
• CET1 Ratio: Ended the quarter at 10.9%.
• Interest-Bearing Deposit Costs: 38 basis point reduction.
• Loan Yields: Decreased by 20 basis points from the fourth quarter.
• Net Charge-Offs: Increased by $16 million to $29 million.
• ACL to Loan Ratio: Increased by 2 basis points to 1.45%.

• Warning! GuruFocus has detected 3 Warning Signs with FRA:0TX.

Release Date: April 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• First Horizon Corp (NYSE:FHN) achieved a 9 basis point expansion in net interest margin, driven by effective deposit pricing strategies.
• The company reported a solid pre-provision net revenue growth of $16 million from the previous quarter.
• FHN successfully repurchased $360 million of stock, reflecting strategic capital deployment.
• The credit performance remained strong with a charge-off ratio of 19 basis points, consistent with prior performance.
• The company maintained a CET1 ratio of 10.9%, indicating a strong capital position.

Negative Points

• Adjusted EPS decreased by $0.01 to $0.42 per share compared to the previous quarter.
• Fee income, excluding deferred compensation, declined by $5 million.
• Provision expense increased by $30 million due to heightened macroeconomic uncertainty.
• Non-performing loans increased slightly by 2 basis points from the fourth quarter.
• The economic environment is marked by uncertainty due to tariffs and trade policies, impacting borrower sentiment and potentially delaying investments.

Q & A Highlights

Q: Can you discuss the PPNR growth outlook given the current uncertainty and volatility, and how potential rate cuts might impact this? A: Hope Dmuchowski, CFO, explained that they are confident in their guidance, which was based on three rate cuts with low single-digit loan growth. They believe that their countercyclical businesses will offset any negative impacts from more than three rate cuts. The focus remains on maintaining margin expansion and managing expenses to support PPNR growth.

Q: What is the company's approach to share buybacks given the current CET1 target and stock valuation? A: Bryan Jordan, CEO, stated that they intend to maintain an 11% CET1 target due to current market volatility and tariff uncertainties. However, they are committed to using excess capital for share repurchases, confident in their ability to generate positive PPNR growth.

Q: How are borrowers responding to the current economic uncertainty, particularly in the C&I sector? A: Bryan Jordan, CEO, noted that while there is a "wait and see" approach among borrowers due to uncertainty, there remains an inherent optimism. Thomas Hung, Chief Credit Officer, added that while some projects are paused, the overall sentiment remains optimistic, with a temporary pause effect on major investments.

Q: Can you elaborate on the reserve increase and the outlook for credit performance? A: Thomas Hung, Chief Credit Officer, explained that the reserve increase reflects macroeconomic uncertainty and potential increases in unemployment. Despite this, the company remains conservatively reserved, with strong credit performance expected to continue.

Q: What is the timeline for achieving the 15% ROTCE target, and what factors will drive this? A: Bryan Jordan, CEO, emphasized that achieving a 15%-plus ROTCE is feasible, driven by a strong footprint, economic drivers, and efficient capital use. The target is contingent on an appropriate economic environment and a potential reduction in the CET1 ratio.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.