First Horizon Corporation · NYSE:FHN
First Horizon — Q3 2024 Earnings Presentation
32 slides from First Horizon's earnings presentation, Oct 16, 2024
Slide 1: Third Quarter 2024 Earnings
Third Quarter 2024 Earnings October 16, 2024
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: 3Q24 GAAP financial summary
3Q24 GAAP financial summary Reported Results 3Q24 Change vs. $ in millions except per share data 3Q24 2Q24 1Q24 4Q23 3Q23 2Q24 3Q23 Net interest income $627 $629 $625 $617 $605 ($1) —% $23 4% Fee income $200 $186 $194 $183 $173 $14 8% $27 15% Total revenue $828 $815 $819 $800 $778 $13 2% $49 6% Expe
Slide 4: Table of contents
Table of contents 3Q24 highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3Q24 adjusted financial results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 5: Strong 3Q24 results driven by stable, diversified business mix
Strong 3Q24 results driven by stable, diversified business mix Adj. EPS Adj. ROTCE NIM Adj. Efficiency $0.42 13.2% 3.31% 59.9% Earnings & • Adjusted PPNR of $335 million, up $11 million from 2Q24 Returns • NII relatively flat, as day count and loan yields offset higher deposit costs • Fees excluding
Slide 6: 3Q24 adjusted financial highlights
3Q24 adjusted financial highlights $ in millions, Adjusted Results 3Q24 Change vs. • 3Q24 adjusted EPS of $0.42 vs. $0.36 in 2Q24 except per share data 3Q24 2Q24 3Q23 2Q24 3Q23 – Adjusted ROTCE of 13.2%, up 125bps Net interest income (FTE) $631 $633 $609 ($2) —% $22 4% Fee income $200 $186 $173 $14
Slide 7: 3Q24 notable items
3Q24 notable items Pre-Tax Notable Items Notable Items 3Q24 ($ in millions, except EPS) • An expense credit of $2 million for the FDIC special FDIC Special Assessment $2 assessment, based on a re-allocation of loss totals from Visa Derivative Valuation Expense $(15) the FDIC in 3Q24 Restructuring ex
Slide 8: NII remained stable, despite falling short term rates
NII remained stable, despite falling short term rates Net Interest Income ($) and NIM (%) $ in millions NII Margin $609 $621 $628 $633 $631 2Q24 $633 3.38% Day Count $4 3.38% Loan Yields & Balances $5 0.01% 3.37% 3.27% 3.31% 3.17% Customer Deposit Rate Paid $(12) (0.06)% Brokered Deposit Balances $0
Slide 9: Focused on growing and deepening client relationships
Focused on growing and deepening client relationships Period end deposits • 3Q24 period end deposits of $66.6 billion were up 3% versus 2Q24 $67.0B $66.6B – Client balances grew approximately $1 billion $65.8B $65.7B $64.8B – Growth was broad based, with particular momentum in $17.8 $16.2 the Caroli
Slide 10: Diversified portfolio across attractive geographic footprint
Diversified portfolio across attractive geographic footprint Period end loans • 3Q24 period end loans of $62.4 billion declined $61.8B $61.8B $62.8B $62.4B $61.3B $0.3 billion or 1% versus 2Q24 $2.2B $2.0B $2.4B $2.9B $3.2B – Loans to mortgage companies (LMC) continued to $13.7B $13.6B $13.6B $13.9B
Slide 11: Fixed income production increased as interest rates declined
Fixed income production increased as interest rates declined Adjusted Results 3Q24 Change vs. $ in millions 3Q24 2Q24 1Q24 4Q23 3Q23 2Q24 3Q23 Fixed income $47 $40 $52 $37 $28 $7 16% $19 68% Mortgage banking $9 $10 $9 $5 $7 ($1) (12%) $2 29% Service charges and fees $59 $58 $57 $59 $60 $0 —% ($1) (2
Slide 12: Expenses stable as lower incentive levels offset strategic investments
Expenses stable as lower incentive levels offset strategic investments Adjusted Results 3Q24 Change vs. $ in millions 3Q24 2Q24 1Q24 4Q23 3Q23 2Q24 3Q23 Salaries and benefits $199 $198 $199 $190 $188 $2 1% $11 6% Incentives and commissions $76 $78 $87 $80 $68 ($2) (3%) $7 11% Deferred compensation e
Slide 13: Disciplined lending leads to strong performance across the cycle
Disciplined lending leads to strong performance across the cycle Net charge-offs • 3Q24 net charge-offs of $24 million decreased $10 million $95 – NCO ratio of 0.15% • Provision expense of $35 million in 3Q24 0.61% 0.57% 0.53% 0.56% – 3Q24 ACL coverage ratio increased slightly to 1.44%, driven by $8
Slide 14: Earnings power supports return of capital to shareholders
Earnings power supports return of capital to shareholders • The CET1 ratio increased 18bps to 11.2%, above the near-term Capital Ratios 11% target 13.6% 14.0% 13.9% 13.7% 13.9% – Continued to generate capital through retained earnings, while supporting customer needs through organic deployment of ca
Slide 15: Updated Full Year 2024 Outlook
Updated Full Year 2024 Outlook FY23 Adjusted FY24 Adjusted Earnings Drivers Comments Baseline Expectations Composition of revenue will be driven by the Total Revenue $3,254 million Flat - Up 2% quantity and pace of interest rate cuts, which will have inverse impacts to NII and fee income. Reflects i
Slide 16: Strategic focus on delivering enhanced shareholder value
Strategic focus on delivering enhanced shareholder value 1 Diversified business model with highly attractive geographic footprint provides opportunity to deliver outperformance through a variety of economic cycles Strong balance sheet and prudent risk management to drive increased capital efficiency
Slide 17: APPENDIX
APPENDIX 17
Slide 18: Actively managing balance sheet sensitivity
Actively managing balance sheet sensitivity Interest rate sensitivity managed in part with interest rate hedges Loan repricing profile Balance sheet hedges Modest interest rate sensitivity1 ARMs 12% +100bps -100bps Swaps +2.0% -2.6% 40% $62.4B Variable $5.0B change in the next 12 months' NII for Fix
Slide 19: Track record of strong results supported by stable, diversified business mix
Track record of strong results supported by stable, diversified business mix • Our diversified business model with a highly attractive geographic footprint provides opportunity to deliver strong performance through a variety of economic cycles • The counter-cyclical businesses (fixed income, loans t
Slide 20: FHN Financial's strong full-cycle returns are counter-cyclical to bank franchise
FHN Financial’s strong full-cycle returns are counter-cyclical to bank franchise • FHN Financial provides fixed income sales & trading, Fed Funds investment advisory, interest rate derivatives and other Average ADR 6.00% in$2.0 services to financial institutions, municipalities and other FOMC easing
Slide 21: Attractive portfolio diversified by customer type, product, and geography
Attractive portfolio diversified by customer type, product, and geography Banking centers in attractive Southeast footprint1 • Stable, cost-effective deposits from a diverse commercial and consumer client base across 12-state footprint and specialty lines of business • Commercial deposits of $37 bil
Slide 22: High credit quality, diversified CRE portfolio
High credit quality, diversified CRE portfolio Maturity Schedule $7.0B • Disciplined risk management practice and underwriting standards across CRE portfolio 39% • No significant upcoming repricing event, as ~72% of loans are floating and maturities are dispersed over time $3.4B $3.1B • Granular por
Slide 23: Strong underwriting in the office and multi-family portfolios
Strong underwriting in the office and multi-family portfolios Office CRE Multi-Family CRE1 • Medical office comprises 49% of office exposure • Average debt service coverage of 1.2x • Only 13 projects are 10 stories or taller • Average stabilized LTV of 52% • Within the traditional office portfolio1:
Slide 24: Granular C&I portfolio and real estate backed consumer portfolio
Granular C&I portfolio and real estate backed consumer portfolio • The C&I portfolio is both geographically diverse and Consumer Portfolio by Product benefits from a lack of industry concentration – No more than 11% C&I exposure to any industry 5% – Southeastern footprint is economically and 14% dem
Slide 25: Investment portfolio prudently managed to support liquidity and IRR
Investment portfolio prudently managed to support liquidity and IRR Investment portfolio • 3Q24 investment portfolio represents ~11% of total assets $9.8B $9.4B $9.6B $9.3B $9.4B – Moderate total portfolio effective duration of 4.6 – Low reliance on HTM designation at ~14% of total portfolio 2.54% 2
Slide 26: Notable Items
Notable Items $ in millions, except EPS 3Q24 2Q24 1Q24 4Q23 3Q23 Summary of Notable Items: Gain/(loss) related to equity securities investments (other noninterest income) $ — $ — $ — $ (6) $ — Net gain on asset disposition (other noninterest income less incentives) — — — 7 — FDIC special assessment
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. $s in millions, except per share data Quarterly, Unaudited 3Q24 2Q24 1Q2
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. $s in millions Quarterly, Unaudited 3Q24 2Q24 1Q24 4Q23 3Q23 Adjusted Di
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. $s in millions Quarterly, Unaudited 3Q24 2Q24 1Q24 4Q23 3Q23 Adjusted No
Slide 30: 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. $s in millions Period end Average 3Q24 2Q24 3Q24 vs. 2Q24 3Q24 2Q24 3Q24
Slide 31: 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. $s in millions Quarterly, Unaudited 3Q24 2Q24 1Q24 4Q23 3Q23 Adjusted no
Slide 32: 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. $s in millions Quarterly, Unaudited 2024 YTD 2019 2020 2021 2022 2023 An