FHN-PC Q4 2025 Earnings Call Summary

Summary of First Horizon (FHN-PC) Q4 2025 Earnings Call

1. Key Financial Results and Metrics

Earnings Per Share (EPS): $0.52
Net Interest Margin (NIM): 3.512%, with a slight compression of 4 basis points; however, adjusted for prior program impacts, NIM expanded by 2 basis points.
Net Interest Income (NII): Grew approximately $2 million quarter-over-quarter.
Loan Growth: Period-end loans increased by $1.1 billion (2% quarter-over-quarter), driven primarily by a $767 million increase in loans to mortgage companies.
Return on Tangible Common Equity (ROTCE): Achieved 15% for 2025.
Capital Returns: Returned nearly $900 million in stock repurchases and over $300 million in dividends in 2025.

2. Strategic Updates and Business Highlights

Focused on improving balance sheet profitability through a better loan mix and disciplined deposit cost management.
Significant progress in the commercial real estate (CRE) sector, with a stabilization in paydowns and an increase in commitments.
Continued investment in technology and personnel to enhance client relationships and operational efficiency.
A new $1.2 billion share repurchase program was announced, with nearly $1 billion remaining in authorization.

3. Forward Guidance and Outlook

2026 Revenue Growth: Expected to range from 3% to 7% year-over-year, with mid-single-digit loan growth anticipated.
Expense Outlook: Projected to remain flattish, with incremental expenses tied to performance-based incentives.
Credit Quality: Net charge-off expectations set at 15 to 25 basis points, reflecting confidence in underwriting standards.
CET1 Target: Near-term target remains at 10.75%, with discussions about potentially lowering it to 10% to 10.5% in the future.

4. Bad News, Challenges, or Points of Concern

NIM Compression: Despite recent improvements, the overall NIM is expected to stabilize around mid-340s, with limited upside potential.
Economic Uncertainty: Concerns about macroeconomic factors, including potential Fed actions and geopolitical risks, could impact growth and profitability.
Credit Quality: While net charge-offs are currently low, there is caution regarding future provisions and the potential for fluctuations in credit quality metrics.

5. Notable Q&A Insights

Revenue Outlook: Management indicated that the revenue growth forecast is based on current economic conditions, with potential upside if loan growth exceeds expectations.
Expense Management: Future expense growth is expected to align with inflation, with a focus on maintaining positive PPNR.
C&I Loan Growth: There is optimism for continued growth in C&I loans, driven by a diverse mix of businesses and a positive economic outlook.
M&A Considerations: Management remains open to small acquisitions that could enhance their branch franchise but emphasizes organic growth and capital efficiency as primary goals.

Overall, First Horizon demonstrated solid performance in Q4 2025, with a focus on strategic growth and capital returns, while navigating potential economic challenges and maintaining a disciplined approach to lending and expenses.

FHN-PC — First Horizon Corporation