First Horizon Corporation · NYSE:FHN
First Horizon — Q1 2023 Earnings Presentation
29 slides from First Horizon's earnings presentation, Apr 18, 2023
Slide 1: First Quarter 2023 Earnings
First Quarter 2023 Earnings April 18, 2023
Slide 2: Disclaimers
Disclaimers Non-GAAP Information Certain measures included in this document are “non-GAAP,” meaning they are not presented in accordance with generally accepted accounting principles in the U.S. and also are not codified in U.S. banking regulations currently applicable to FHN. FHN’s management belie
Slide 3: 1Q23 GAAP financial summary
1Q23 GAAP financial summary1 Reported 1Q23 Change vs. $s in millions except per share data 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $/bps % $/bps % Net interest income $ 688 $ 709 $ 662 $ 542 $ 479 $ (21) (3)% $ 209 44 % Fee income 171 174 213 201 229 (3) (2)% (58) (25)% Total revenue 859 882 875 743 707
Slide 4: Table of contents
Table of contents First Horizon’s strength and stability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1Q23 key messages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 5: First Horizon's strength and stability
First Horizon’s strength and stability Strength Stability • Strong capital position • Disciplined risk management and credit culture has resulted in strong credit performance • Continued earnings strength with through economic cycles counter-cyclical businesses • Diversified deposit and loan composi
Slide 6: Strong results driven by stable, diversified business mix
Strong results driven by stable, diversified business mix1 Adjusted EPS Adjusted PPNR CET1 $0.45 $406 million 10.36% +11% -2 bps -3% Fixed Net Interest Net Interest Income Fees Margin Income 0% -5% +2% Adjusted Adjusted PE Loans Expense PPNR ex. LMC 55% 0.11% 53% Deposits Annualized Net Adjusted Eff
Slide 7: Continued strong returns, credit quality and expense discipline in 1Q23
Continued strong returns, credit quality and expense discipline in 1Q23 Adjusted EPS of $0.45 and PPNR of $406 million1 • Adjusted revenue of $863 million decreased $22 million, or 2%, QoQ due to lower net interest income driven primarily by day count, seasonality and minor NIM compression – NII dow
Slide 8: 1Q23 notable items
1Q23 notable items1 GAAP results reduced by $0.03 per share of notable items ($s in millions, except per share data) Notable Items Pre-tax Notable Items 1Q23 TD transaction-related items Noninterest expense: • TD transaction-related expense of $21 million Incentives and commissions $ 16 – $16 millio
Slide 9: 1Q23 adjusted financial highlights
1Q23 adjusted financial highlights1 PPNR up 63% year-over-year reflecting strength in NII and continued expense discipline 1Q23 vs. 4Q22 Highlights 1Q23 Change vs. • Adjusted EPS of $0.45 vs. $0.51, primarily impacted by day count, seasonality and higher $s in millions except per share data 1Q23 4Q2
Slide 10: NII trends reflect increased funding costs & macroeconomic environment
NII trends reflect increased funding costs & macroeconomic environment1 Period end results reflect 2% loan growth and 2% C&I loan growth ex. LMC Core FTE NII and NIM Trends 1Q23 vs. 4Q22 Highlights ($s in millions) $712 $691 $666 • FTE NII decreased $21 million, or 3%, while NIM $711 $690 decreased
Slide 11: Continued strong deposit base above pre-pandemic levels
Continued strong deposit base above pre-pandemic levels1 Average deposit growth CAGR from 1Q20 to 1Q23 of 2% Deposit trends2 1Q23 vs. 4Q22 Highlights ($s in billions) • Average deposits of $62.2 billion decreased $2.7 billion, $74.6$74.2 or 4% $73.2 $73.7 $71.9 $69.6 $71.0 – Driven by a $2.7 billion
Slide 12: Well diversified and stable funding mix
Well diversified and stable funding mix1 55% of deposits insured by the FDIC 1Q23 deposits by state • Stable cost-effective deposits from a diverse commercial and ($s in billions) consumer client base across Regional, Specialty Bank segments, LA, 12% AL, 3% and 12-state footprint NC, 11% TX, 3% GA,
Slide 13: Total loan growth of 2% ex LMC
Total loan growth of 2% ex LMC1 Period end loans ex LMC up 2% QoQ Loan trends Period-end Average 1Q23 vs. 4Q22 Highlights $59.0B • Loans of $58.1 billion up $510 million driven by a $58.1B $56.5B $57.6B $58.1B $55.0B 3% $55.6B 4% 3% —% $319 million increase in consumer and a $191 million 4% —% 6% 5%
Slide 14: Adjusted fee income trends impacted by seasonality and broader market volatility
Adjusted fee income trends impacted by seasonality and broader market volatility1 Results driven by increases in fixed income and mortgage banking 1Q23 vs. 4Q22 Highlights 1Q23 Change vs. • Adjusted fee income down $2 million, or 1%, $s in millions 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 driven by decrea
Slide 15: Continued expense discipline kept adjusted expense flat
Continued expense discipline kept adjusted expense flat1 Expenses flat despite minimum wage increase to $20 per hour and seasonality 1Q23 vs. 4Q22 Highlights 1Q23 Change vs. • Adjusted expense of $457 million down $s in millions 1Q23 4Q22 3Q22 2Q22 1Q22 4Q22 1Q22 $1 million as higher salaries and em
Slide 16: Continued strong credit quality
Continued strong credit quality Reserve build reflects the impact of loan growth and revised macroeconomic outlook Provision, credit losses, and net charge-offs 1Q23 vs. 4Q22 Highlights ($s in millions) $60 $50 • Net charge-offs of $16 million decreased $10 million $45 $30 $26 $10 $12 $12 $16 • Prov
Slide 17: Diversified high credit quality loan portfolio
Diversified high credit quality loan portfolio Geographically diverse portfolio with minimal concentration across property types 1Q23 Highlights PE CRE by State Composition • Disciplined risk management practice and underwriting standards across CRE and C&I portfolio 26% • CRE balances to Risk Based
Slide 18: Strong capital position
Strong capital position1 Low exposure to unrealized securities losses due to small portfolio size and moderate effective duration 1Q23 vs. 4Q22 Highlights Capital levels • CET1 ratio remained strong at 10.4% benefit of adjusted NIAC partially offset by a reduction tied to growth in loans and unfunde
Slide 19: Award-winning franchise
Award-winning franchise 1Q23 First Horizon received over 30 accolades and First Horizon was the second highest recipient of Greenwich Awards overall 23 Greenwich Excellence and Best Brand Awards1 Recognized by Great Place to Work™ & Middle Market Bloomberg Gender-Equality Index for • Ease of Doing B
Slide 20: 2023 strategic focus to continue building enterprise value
2023 strategic focus to continue building enterprise value 1 Focus on driving enhanced value for our shareholders, clients, communities and associates 2 Remain disciplined, actively manage balance sheet and maintain excellent credit quality through strong risk management practices, specialty experti
Slide 21: Appendix
APPENDIX 21
Slide 22: Investment portfolio
Investment portfolio1 Prudently managed to support liquidity and IRR 1Q23 Highlights 1Q22-1Q23 investment portfolio ($s in billions) $9.8 $10.3 $10.1 $10.3 $9.7 • Portfolio represents ~13% of total assets • Moderate total portfolio effective duration of 5.2 years 2.41% 2.45% • Low reliance on HTM de
Slide 23: NII/NIM reconciliation to GAAP financials
NII/NIM reconciliation to GAAP financials 1Q23 Reported to Core Reconciliation 3Q22 Reported to Core Reconciliation 1Q22 Reported to Core Reconciliation $s in millions NII NIM $s in millions NII NIM $s in millions NII NIM 1Q23 Reported (FTE) $ 691 3.87 % 3Q22 Reported (FTE) $ 666 3.49 % 1Q22 Reporte
Slide 24: Notable Items
Notable Items ($s in millions except per share data) (In millions) 1Q23 4Q22 3Q22 2Q22 1Q22 Summary of Notable Items: Gain on sale of title services business $ — $ 1 $ 21 $ — $ — Gain related to equity securities investments — — 10 — 6 Gain on sale of mortgage servicing rights — — — 12 — IBKC merger
Slide 25: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in
Slide 26: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited ($s in
Slide 27: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. CONSOLIDATED NON-GAAP TO GAAP RECONCILIATION Quarterly, Unaudited (In mi
Slide 28: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. Period-end Average ($s in millions) 1Q23 4Q22 1Q23 vs. 4Q22 1Q23 4Q22 1Q
Slide 29: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. Average ($s in billions) 1Q20 2Q20 Interest-bearing deposits Legacy FHN