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

1Key Financial Results and Metrics

Earnings Per Share (EPS):: $0.52

Net Interest Margin (NIM):: 3.512%, with a slight compression of four basis points; however, excluding notable items, NIM expanded by two basis points.

Net Interest Income (NII):: Grew approximately $2 million quarter-over-quarter.

Loan Growth:: Period-end loans increased by $1.1 billion (2% QoQ), driven primarily by a $767 million increase in loans to mortgage companies.

Return on Tangible Common Equity (ROTCE):: Achieved 15% for the year.

Capital Returns:: Returned nearly $900 million in stock repurchases and over $300 million in dividends in 2025.

Common Equity Tier 1 (CET1) Ratio:: Ended the quarter at 10.64%, with a target of 10.75% for the near term.

2Strategic Updates and Business Highlights

Profitability Focus:: Continued emphasis on improving profitability through a better loan mix and disciplined deposit pricing.

Capital Management:: Announced a new $1.2 billion share repurchase program, with approximately $1 billion remaining authorization.

Growth Initiatives:: Investments in technology, personnel, and new branches to enhance service delivery and deepen client relationships.

Market Positioning:: Positive momentum in commercial lending and treasury management, with expectations of improved client confidence in the economy.

3Forward Guidance and Outlook

2026 Revenue Growth:: Projected total revenue growth of 3% to 7% year-over-year, driven by mid-single-digit loan growth and improved fee income.

Expense Management:: Anticipated flattish expenses in 2026, with potential incremental increases tied to higher revenues from countercyclical businesses.

Loan Growth Expectations:: Mid-single-digit growth anticipated, with a focus on maintaining disciplined lending practices.

Credit Quality Outlook:: Expected net charge-offs of 15 to 25 basis points, reflecting confidence in underwriting standards.

4Bad News, Challenges, or Points of Concern

NIM Compression:: Despite overall positive trends, NIM showed slight compression, which could impact future profitability.

Credit Quality Risks:: An increase in criticized and classified loans by 11% sequentially, raising concerns about future provisions and credit quality.

Economic Uncertainty:: Potential macroeconomic headwinds, including geopolitical risks and the impact of the Fed's balance sheet management on deposit pricing.

Competitive Pressures:: Ongoing competition in the market may affect deposit costs and overall profitability.

5Notable Q&A Insights

Revenue Outlook Clarification:: Management indicated that the revenue guidance of 3% to 7% is based on current economic conditions and loan growth expectations, with potential upside if loan growth exceeds mid-single digits.

Expense Growth Discussion:: While expenses are expected to remain flat, any significant increases in commissions tied to revenue growth would be viewed positively as a sign of successful business performance.

C&I Loan Growth Drivers:: Growth in C&I loans is expected to come from a diverse mix of businesses, with optimism about increased utilization rates as economic conditions improve.

Mortgage Warehouse Growth:: Continued growth in mortgage warehouse lending is anticipated, supported by new client acquisitions and upsizing existing relationships. Overall, First Horizon demonstrated solid financial performance in Q4 2025, with a focus on profitability and strategic growth initiatives, while also navigating challenges related to credit quality and economic uncertainty.