FHN-PF — First Horizon Corporation

Summary of First Horizon (FHN-PF) Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted Earnings Per Share (EPS): Increased by $0.09 (20%) year-over-year to $0.54.
• Adjusted Pre-Provision Net Revenue (PPNR): Grew by 8% year-over-year to $364 million.
• Loan Balances: Period-end loan balances rose by approximately $2 billion compared to Q2 2025, with a quarterly increase of $953 million.
• Net Interest Income (NII): Increased by $9 million, with a net interest margin (NIM) settling in the high 340s, reflecting a 3 basis point compression.
• Deposit Balances: Increased by $1.6 billion compared to the prior quarter, driven mainly by brokered deposits. Average interest-bearing deposit costs rose to 2.33%.
• Credit Metrics: Net charge-offs increased by $4 million to $33 million, with a net charge-off ratio of 20 basis points. The allowance for credit losses (ACL) to loan ratio declined to 1.24%.

2. Strategic Updates and Business Highlights

• Growth Strategy: Focused on building long-term client relationships and investing in talent and technology to enhance service delivery.
• Wealth Management: Increased brokerage, trust, and insurance income, attributed to momentum in the wealth management business following the conversion to the LPL platform.
• Hiring Initiatives: Continued investment in hiring, particularly in commercial and wealth management roles, with 53 new hires in the quarter.
• Capital Management: CET1 ratio maintained at 10.5%, with ongoing share buybacks totaling $100 million for 4 million shares.

3. Forward Guidance and Outlook

• Revenue Growth: Full-year revenue growth expectations remain at 3% to 7%, with potential for mid-single-digit loan growth.
• NIM Expectations: Anticipated to stabilize in the mid to high 340s, with slight compression expected due to rising deposit costs.
• PPNR Opportunity: The bank reiterated a $100 million PPNR opportunity, focusing on deeper client relationships and cross-selling initiatives.

4. Bad News, Challenges, or Points of Concern

• Competitive Pressures: Increased competition for deposits leading to rising costs, particularly in Q2 and Q3, which may affect margins.
• Fixed Income Revenue: Decline in fixed income revenues due to macroeconomic volatility and geopolitical uncertainties, with expectations for weaker performance in the second half of the year.
• Credit Risk Monitoring: While credit metrics are currently stable, there are concerns about consumer-sensitive sectors like trucking and restaurants, which are being closely monitored for potential deterioration.

5. Notable Q&A Insights

• Deposit Costs Outlook: CFO Hope Dmuchowski indicated that deposit costs are expected to rise in the second half of the year, similar to trends observed in 2025.
• Loan Market Dynamics: CEO Bryan Jordan noted a surprisingly optimistic loan market, with strong pipelines despite competitive pressures on pricing.
• Credit Quality: Chief Credit Officer Thomas Hung expressed confidence in current credit performance but acknowledged the need to monitor consumer-sensitive sectors closely.
• Hiring Strategy: The bank is focused on attracting talent through a combination of big bank capabilities and community bank service, which has been a significant driver of new hires.

Overall, First Horizon reported solid financial performance in Q2 2026, with strategic initiatives aimed at sustaining growth and profitability, while also navigating competitive and economic challenges.