FHN — First Horizon Corporation

Summary of First Horizon (FHN) 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 Main Street Lending Program impacts, NIM expanded by two 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), with significant growth 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.
• Common Equity Tier 1 (CET1) Ratio: Ended at 10.64%, with a target of 10.75%.

2. Strategic Updates and Business Highlights:

• Focused on improving balance sheet profitability through better loan mix and disciplined deposit cost management.
• Increased yields on market-based commercial real estate lending for new 2025 originations by 534 basis points.
• Continued investment in technology and personnel to enhance service delivery and client relationships.
• Announced a new $1.2 billion share repurchase program in October 2025, with approximately $1 billion remaining for future buybacks.

3. Forward Guidance and Outlook:

• 2026 Revenue Growth: Expected to range from 3% to 7%, driven by mid-single-digit loan growth and improvements in fee income.
• Expense Outlook: Anticipated to remain flat, with potential increases tied to performance-based incentives.
• Loan Growth Expectations: Mid-single-digit growth anticipated, with optimism about commercial lending pipelines and mortgage warehouse growth.
• Net Charge-Offs: Expected to remain in the range of 15 to 25 basis points, reflecting confidence in underwriting standards.

4. Bad News, Challenges, or Points of Concern:

• Credit Quality: Net charge-offs increased to $30 million, with a net charge-off ratio of 19 basis points. Concerns about the potential for fluctuations in credit quality amidst economic uncertainties.
• Regulatory Environment: Uncertainty regarding regulatory changes and their potential impact on capital management and M&A opportunities.
• Market Volatility: Potential disruptions from macroeconomic factors (e.g., geopolitical tensions) could affect loan growth and client sentiment.

5. Notable Q&A Insights:

• Revenue Outlook: Management indicated that the revenue growth forecast is based on current economic conditions and loan growth expectations, with potential upside if economic conditions improve.
• Expense Management: The company reiterated its commitment to maintaining flat expenses while acknowledging that higher revenues could lead to increased commission expenses.
• Commercial Real Estate (CRE) Outlook: Management expressed cautious optimism for CRE growth, citing improved pipeline activity and a stabilization in commitments.
• Mortgage Warehouse Growth: Continued client acquisition is expected, with a mix of new and existing clients contributing to growth in this segment.
• C&I Loan Growth: Broad-based growth across various sectors, with an optimistic outlook for increased utilization rates as customer confidence improves.

Overall, First Horizon demonstrated solid financial performance in Q4 2025, with a positive outlook for 2026, while acknowledging potential challenges in credit quality and regulatory environments.