Summary of First Horizon (FHN-PF) Q3 2025 Earnings Call

1Key Financial Results and Metrics

Adjusted Earnings Per Share (EPS): $0.51, up $0.06 from Q2 2025.

Return on Tangible Common Equity (ROTCE): 15%, an increase of 135 basis points.

Net Interest Income (NII): Grew by $33 million, with a net interest margin (NIM) expansion of 15 basis points to 3.55%.

Deposits: Period-end balances decreased by $52 million, primarily due to a $652 million drop in brokered CDs, although noninterest-bearing deposits rose by $131 million.

Loan Portfolio: Slight decrease in period-end loans, with a notable decline in loans to mortgage companies, consistent with seasonal patterns.

Net Charge-Offs: Decreased to $26 million, with a net charge-off ratio of 17 basis points.

Common Equity Tier 1 (CET1): Remained flat at 11%.

2Strategic Updates and Business Highlights

The company is focusing on profitability, safety, soundness, and sustainable growth, with a commitment to enhancing client relationships through technology investments.

First Horizon is seeing a positive trend in client confidence and pipeline momentum, particularly in the context of recent Fed rate cuts.

The company has accelerated share buybacks, repurchasing approximately $190 million worth of shares.

A significant contribution of $20 million to the First Horizon Foundation was made, maximizing tax advantages for 2025.

3Forward Guidance and Outlook

The company maintains its guidance for year-over-year growth in pre-provision net revenue (PPNR) and expects to achieve a sustainable ROTCE of over 15%.

First Horizon is targeting a CET1 ratio of 10.75% in the near term, with plans to progress towards long-term targets of 10% to 10.5%.

The outlook for charge-offs and taxes remains unchanged, with expectations of continued loan growth in 2026.

4Bad News, Challenges, or Points of Concern

Deposit Trends: There is a notable decline in core deposits over the last two quarters, raising concerns about the sustainability of the deposit franchise amid increasing competition for deposits.

Loan Growth: The company anticipates continued paydowns in the commercial real estate (CRE) segment, which may delay net growth in that area.

Market Competition: Increased competition for loans and deposits, particularly following recent M&A activity in the banking sector, may pressure margins and growth.

Economic Uncertainties: Potential impacts from tariffs and macroeconomic conditions could affect client confidence and lending activity.

5Notable Q&A Insights

Client Confidence: CEO D. Bryan Jordan noted a noticeable increase in client confidence and activity, particularly in the context of lower interest rates.

Margin Expectations: CFO Hope Dmuchowski indicated that while the margin was positively impacted this quarter, a more normalized range would likely be in the high 3.30s to low 3.40s moving forward.

M&A Strategy: The leadership emphasized a focus on organic growth but acknowledged the potential for opportunistic M&A in the future, particularly if it aligns with their existing footprint and enhances shareholder value.

Credit Quality: Credit trends remain stable, with a focus on monitoring the non-depository financial institution (NDFI) loan exposure, which is being managed carefully. Overall, First Horizon reported a solid quarter with strong earnings growth, but faces challenges in deposit retention and loan growth amidst a competitive landscape. The outlook remains cautiously optimistic, with strategic initiatives aimed at sustaining profitability and growth.