First Horizon Corporation (FHN) Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics:

Earnings Per Share (EPS): $0.53, up $0.11 year-over-year.

Return on Average Assets (ROAA): 1.3%, an increase of 19 basis points from Q1 2025.

Return on Tangible Common Equity (ROTCE): 15.1%, up over 200 basis points year-over-year.

Net Interest Income (NII): Grew 6% year-over-year, outpacing loan portfolio growth of 3%.

Adjusted Pre-Provision Net Revenue (PPNR): Increased by 8% compared to the previous year.

Common Equity Tier 1 (CET1) Ratio: 10.53%, with a Tier 1 capital ratio of 11.95%.

Tangible Book Value per Share: $14.34, a 9% increase year-over-year.

2Strategic Updates and Business Highlights:

Continued focus on relationship banking, with strong growth in Commercial & Industrial (C&I) loans, which increased by $624 million in the quarter.

The company successfully executed a buyback of approximately $230 million in common shares and issued $400 million of Series H preferred stock.

Emphasis on enhancing client relationships and expanding treasury and wealth management services.

Progress on a $100 million PPNR opportunity, driven by improved CRE pricing and deeper integration of regional and specialty banking.

3Forward Guidance and Outlook:

Maintained full-year revenue growth expectations of 3% to 7%, with potential for higher growth if economic conditions improve.

Anticipated seasonal increases in loans to mortgage companies in Q2, though overall mortgage origination remains low.

Continued focus on expense discipline while investing in growth, with a flat expense outlook year-over-year.

Optimism regarding the lending environment, particularly in C&I, despite macroeconomic uncertainties.

4Challenges and Points of Concern:

Deposit Competition: Increased competition for deposits with rising interest rates, leading to a slight uptick in deposit costs expected in Q2 and Q3.

Commercial Real Estate (CRE): Ongoing headwinds in CRE loan balance growth, although strong pipelines are noted for future stabilization.

Consumer Loan Portfolio: Experienced a decline of $198 million, indicating challenges in consumer lending.

Economic Uncertainty: Concerns regarding discretionary spending due to rising energy prices and geopolitical tensions, which could impact credit performance.

5Notable Q&A Insights:

C&I Lending Outlook: CEO D. Bryan Jordan expressed optimism about C&I pipelines remaining strong despite macro uncertainties, with business leaders looking to invest and grow.

Mortgage Warehouse Lending: CFO Hope Dmuchowski indicated expectations for seasonal increases in warehouse balances but acknowledged the low mortgage origination environment.

Credit Quality: Chief Credit Officer Thomas Hung noted consistent credit performance but highlighted the need to monitor sectors tied to consumer discretionary spending.

Expense Management: The company is focused on maintaining flat expenses while investing in new talent and technology, with a cautious approach to economic uncertainties impacting revenue growth. Overall, FHN demonstrated strong financial performance in Q1 2026, with a positive outlook on C&I lending and strategic initiatives aimed at enhancing profitability, despite facing challenges in deposit competition and consumer lending.