FHN-PE — First Horizon Corporation

Summary of First Horizon (FHN-PE) 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; excluding notable items, NIM expanded by 2 basis points.
• Net Interest Income (NII): Grew by 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.
• Capital Returns: Returned nearly $900 million in stock repurchases and over $300 million in dividends.
• Common Equity Tier 1 (CET1) Ratio: Ended the quarter at 10.64%, with a target of 10.75% for the near term.

2. Strategic Updates and Business Highlights

• Profitability Improvement: Achieved a return on tangible common equity (ROTCE) of 15% for 2025, with a focus on enhancing balance sheet profitability through better loan mix and disciplined deposit pricing.
• Growth in Commercial Lending: Positive momentum in commercial and industrial (C&I) loans, with strong origination volumes and a diversified pipeline.
• Technology Investments: Continued investment in technology and personnel to enhance operational efficiency and client service.
• Strategic Framework: Simplified strategic plan to focus on client relationships and profitability, aiming for $100 million in incremental pre-provision net revenue (PPNR) growth over the next few years.

3. Forward Guidance and Outlook

• 2026 Revenue Growth: Projected total revenue growth of 3% to 7%, with mid-single-digit loan growth expected.
• Expense Management: Anticipated flattish expenses, with potential increases tied to countercyclical revenue growth.
• Credit Quality: Expected net charge-offs between 15 to 25 basis points, reflecting confidence in underwriting standards.
• Capital Management: Plans for continued capital returns, with a focus on maintaining CET1 within the 10% to 10.5% range over the longer term.

4. Bad News, Challenges, or Points of Concern

• NIM Compression: Although NIM showed slight improvement excluding notable items, overall compression could indicate potential challenges in maintaining margins amid fluctuating interest rates.
• Credit Quality Risks: An increase in criticized and classified assets by 11% sequentially, although net charge-offs remain low, could signal underlying credit quality concerns.
• Regulatory Environment: Ongoing uncertainties regarding regulatory changes and their potential impact on capital management strategies.
• Market Competition: The competitive landscape for deposits and loans remains a concern, particularly with potential pressures on deposit pricing.

5. Notable Q&A Insights

• Revenue Outlook Clarification: Management indicated that the 3% to 7% revenue growth outlook is based on current economic conditions and loan growth expectations, with potential upside if market conditions improve.
• Expense Growth Discussion: Expenses are expected to remain flat unless driven by countercyclical revenue, with a focus on maintaining positive PPNR.
• C&I Loan Growth Drivers: The growth in C&I loans is broad-based, with strong production across various business units, indicating robust demand.
• Mortgage Warehouse Growth: Continued growth in the mortgage warehouse lending business is expected, with management confident in their risk management practices.
• Regulatory Considerations for M&A: Management expressed confidence in their ability to pursue M&A opportunities if they align with strategic goals, without being overly concerned about regulatory changes.

This summary encapsulates First Horizon's financial performance, strategic initiatives, outlook, and key concerns as discussed in the Q4 2025 earnings call.