FHN-PF — First Horizon Corporation

Summary of First Horizon (FHN-PF) 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 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.

2. Strategic 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.

3. Forward 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.

4. Bad 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.

5. Notable 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.