FHN-PC — First Horizon Corporation

Summary of First Horizon Corporation (FHN-PC) Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): $0.53, up $0.11 year-over-year.
• Return on Average Assets (ROAA): 1.3%, an increase of 19 basis points year-over-year.
• Adjusted Return on Tangible Common Equity (ROTCE): 15.1%, up over 200 basis points year-over-year.
• Net Interest Income (NII): Grew 6% year-over-year, outpacing loan portfolio growth of 3%.
• Adjusted Pre-Provision Net Revenue (PPNR): Increased by 8% year-over-year.
• Common Equity Tier 1 (CET1) Ratio: 10.53%, with a target updated to 10.5%.
• Tangible Book Value per Share: $14.34, up 9% year-over-year.
• Net Charge-Offs: $29 million, with a net charge-off ratio of 18 basis points.

2. Strategic Updates and Business Highlights

• The company reported strong C&I client growth and emphasized a relationship-focused banking model.
• Continued focus on profitability and disciplined pricing strategies.
• Successful share buybacks totaling approximately $230 million during the quarter, with $765 million remaining under board authorization.
• The bank's diversified business model is positioned to adapt to evolving market conditions.
• Notable growth in the C&I portfolio, with $624 million added in the quarter, despite challenges in commercial real estate (CRE) lending.

3. Forward Guidance and Outlook

• The company maintains its full-year revenue growth outlook of 3% to 7%, driven by a combination of fee income and net interest income.
• Positive sentiment regarding C&I pipelines, with expectations for continued growth despite macroeconomic uncertainties.
• The management remains optimistic about achieving the $100 million PPNR target over the next couple of years, driven by deepening client relationships and enhanced service offerings.

4. Bad News, Challenges, or Points of Concern

• Deposit Competition: Increased competition for deposits is anticipated, with expectations of slightly rising deposit costs in Q2 and Q3.
• Commercial Real Estate (CRE): Ongoing headwinds in the CRE sector, with stabilized loans moving to permanent markets and a decline in balances.
• Consumer Loan Portfolio: A decline of $198 million in consumer loans, reflecting normal fluctuations and competitive pressures.
• Economic Uncertainty: Concerns regarding the impact of geopolitical events and rising energy prices on consumer discretionary spending.

5. Notable Q&A Insights

• C&I Lending Environment: CEO D. Bryan Jordan expressed optimism about C&I pipelines, noting that macro uncertainties have not significantly impacted lending activity.
• Mortgage Warehouse Lending: CFO Hope Dmuchowski indicated expectations for a seasonal increase in warehouse balances, though the outlook for mortgage origination remains cautious.
• NIM and Deposit Costs: The management expects slight upward pressure on deposit costs but believes fixed-rate asset repricing will help stabilize net interest margin (NIM).
• Credit Quality: Chief Credit Officer Thomas Hung noted consistent credit performance, with a focus on monitoring sectors sensitive to consumer spending.
• Expense Management: The company aims for flat expenses year-over-year, with strategic investments in growth and talent without significantly increasing costs.

Overall, First Horizon Corporation demonstrated strong financial performance in Q1 2026, with a focus on client relationships and profitability, while navigating challenges in deposit competition and the commercial real estate market. The outlook remains cautiously optimistic, with strategic initiatives aimed at sustaining growth and enhancing shareholder value.