First Horizon Corporation · NYSE:FHN
First Horizon — Earnings Presentation (January 2025)
31 slides from First Horizon's earnings presentation, Jan 16, 2025
Slide 1: Q1 Economic Update
Q1 Economic Update January 2025 1
Slide 2: Presenter: Sophia Kearney-Lederman
P RES E N T E R Sophia Kearney-Lederman Senior Economist FHN Financial 2
Slide 3: Wait-and-see carries into 2025
Wait-and-see carries into 2025 January 16, 2025 Sophia Kearney-Lederman Senior Economist, FHN Financial
Slide 4: 100bps of cuts since September
100bps of cuts since September Federal Funds Target Rate 6.0% Upper bound 5.5% Today, the Federal Open Market Committee decided to reduce the degree of 5.0% policy restraint by lowering our policy interest rate by 1/2 percentage point. This decision reflects our growing confidence that, with an appr
Slide 5: FOMC easing into a different economy than usual
FOMC easing into a different economy than usual Evolution of median participants' projections: Real GDP Evolution of median participants' projections: PCE 3.0% Mar '24 Jun '24 Sept '24 Dec '24 Mar '24 Jun '24 Sept '24 Dec '24 Hundreds 3.0% Hundreds 2.5% 2.5% 2.5% 2.0% 2.4% 2.5% 2.1% 2.0% 2.0% 2.1% 1
Slide 6: Q4 growth tracking steady and strong
Q4 growth tracking steady and strong Atlanta Fed GDPNow: Q4-24 3.50% 3.25% 2.73% 3.00% Initial 2.66% 2.75% 2.50% 2.25% 2.00% 1.75% 1.50% 31-Oct 7-Nov 14-Nov 21-Nov 28-Nov 5-Dec 12-Dec 19-Dec 26-Dec 2-Jan 9-Jan Source: Federal Reserve Bank of Atlanta, Bloomberg, FHN Financial 6
Slide 7: Slightly slower, but still solid growth in 2025
Slightly slower, but still solid growth in 2025 Real GDP w/ Forecast 6.0% Qrt/Qtr Annualized w/ Sector Contributions Forecast ➔ 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% Consumption Bus. Fixed Invest Residential Invest. Government -3.0% Inventories Net Exports Real GDP, Qtr/Qtr -4.0% Q1-23 Q2-23 Q3-
Slide 8: ISM indices capture sentiment heading into 2025
ISM indices capture sentiment heading into 2025 ISM Indices 65 ISM Indices: New Orders Manufacturing Manufacturing 70 Contraction < 50 < Expansion Contraction < 50 < Expansion Services 60 Services 55 60 50 50 45 40 40 2022 2023 2024 2022 2023 2024 ISM Indices: Employment ISM Indices: Prices Paid Con
Slide 9: Labor market seems to have stabilized
Labor market seems to have stabilized Openings Rate 8.0% Quits Rate 3.2% 7.5% 3.0% 7.0% 2.8% 6.5% 2.6% 6.0% 2.4% 5.5% 2.2% 5.0% 2.0% 4.5% 4.0% 1.8% 3.5% 1.6% 3.0% 1.4% 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 Hires Rate 6.5% 1.8% Layoffs Rate 1.7% 6.0% 1.6% 5.5% 1.5% 5.0% 1.4% 4.5
Slide 10: Hiring was volatile & slower in '24, picked up in Q4
Hiring was volatile & slower in ’24, picked up in Q4 Nonfarm Payrolls 600k Monthly change Government Services Goods Total 3mth Avg 12mth Avg 500k 400k 300k 200k 100k 0k Jan '23 Apr '23 Jul '23 Oct '23 Jan '24 Apr '24 Jul '24 Oct '24 Source: Bureau of Labor Statistics 10
Slide 11: Unemployment rate has stopped rising
Unemployment rate has stopped rising Unemployment Rate 4.50% 4.22% 4.23% 4.40% Unemployment Rate 4.30% 3mth avg 4.20% 4.10% 4.00% 4.09% 3.90% 3.80% 3.70% 3.60% 3.67% 3.50% 3.40% 3.45% 3.30% 3.20% Jan '22 Apr '22 Jul '22 Oct '22 Jan '23 Apr '23 Jul '23 Oct '23 Jan '24 Apr '24 Jul '24 Oct '24 Source:
Slide 12: Immigration has driven labor force growth since '22
Immigration has driven labor force growth since ‘22 Components of Annual Population Change 3.5m Total Migration Natural Change (Births - Deaths) 3.0m Total Population Change 2.5m 2.0m 1.5m 1.0m 0.5m 0.0m Source: US Census Bureau, FHN Financial 12
Slide 13: Average hourly earnings growth off recent lows
Average hourly earnings growth off recent lows Average Hourly Earnings 6.0% Yr/Yr% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 2019 2020 2021 2022 2023 2024 Source: Bureau of Labor Statistics, Macrobond, FHN Financial 13
Slide 14: Headline inflation ticking higher, core inflation stuck
Headline inflation ticking higher, core inflation stuck CPI & PCE Inflation 10.0% CPI, Yr/Yr% 9.0% Core CPI, Yr/Yr% 8.0% PCE, Yr/Yr% Core PCE, Yr/Yr% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2019 2020 2021 2022 2023 2024 Source: Bureau of Labor Statistics, Bureau of Economic Analysis, Macrobond, FHN
Slide 15: December CPI report was both good and bad
December CPI report was both good and bad CPI Inflation Contributions Core services, m/m (left) 1.00% 7.0% Core goods, m/m (left) Food, m/m (left) Energy, m/m (left) 6.0% 0.75% Yr/Yr% (right) 5.0% 0.50% 4.0% 0.25% 3.0% 0.00% 2.0% -0.25% 1.0% -0.50% 0.0% Jan '23 Apr '23 Jul '23 Oct '23 Jan '24 Apr '2
Slide 16: Inflation still at the forefront of consumer concerns
Inflation still at the forefront of consumer concerns Annual Change Dec '23 Yr/Yr 25% 20.3% Dec '24 Yr/Yr% 20% 11.3% 15% 6.9% 6.3% 10% 4.3% 5.2% 4.8% 3.3% 2.9% 3.6% 3.3% 5% 1.3% 1.8% 0.1% 0% -1.4% -0.9% -2.6% -3.8% -5% -10% Per Capita All Items Food at Home Food Away New & Used Motor Vehicle Owners'
Slide 17: Mortgage rates keep pressure on housing affordability
Mortgage rates keep pressure on housing affordability Avg 30-yr Mortgage rate vs Effective mortgage rate 9.0% 8.5% 8.0% 30yr Mortgage Rate 7.5% Effective Mortgage Rate 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Source: Bure
Slide 18: Still too soon for inflation victory
Still too soon for inflation victory Core PCE Inflation 9.0% Yr/Yr% 8.5% 8.0% Core PCE, Yr/Yr% 7.5% Supercore PCE, Yr/Yr% 7.0% 6.5% Core Goods PCE, Yr/Yr% 6.0% Housing PCE, Yr/Yr% 5.5% 2.00% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% 2019 2020 2021 2022 2023 2024
Slide 19: Inflation is a wildcard to start the year
Inflation is a wildcard to start the year Core PCE What-If 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% Core PCE, Yr/Yr% 2.50% 0.36% per month = Q1 '24 avg 2.00% 0.19% per month = Q2 '24 avg 1.50% 0.20% per month = Q3 '24 avg 0.16% per month = Q4 '24 avg 1.00% 0.23% per month = YTD '24 avg 0.50% 0.00%
Slide 20: 2025 FOMC Hawkometer
2025 FOMC Hawkometer Voters checked; permanent voters in bold *Michael Barr will step down as VC for Supervision in February, plans to remain on board. Pat Harker reaches mandatory retirement age in June. Source: Federal Reserve, FHN Financial 20
Slide 21: December dot plot
December dot plot Current level -50bps Year-end median -50bps -25bps Source: Federal Reserve, FHN Financial 21
Slide 22: Even more patience as neutral rate might be higher
Even more patience as neutral rate might be higher Evolution of median participants' projections: Fed funds rate 6.00% Hundreds 5.50% Dec '23 Mar '24 June '24 Sept '24 Dec '24 5.00% 4.50% 4.4% 4.00% 3.9% 3.50% 3.4% 3.1% 3.00% 3.0% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2024 2025 2026 2027 Longer Run So
Slide 23: Rise in long-term yields since the Fed started easing
Rise in long-term yields since the Fed started easing 6.00% The Treasury yield curve Jan 15, 2025 Dec 13, 2024 5.50% Sep 13, 2024 Jan 15, 2024 5.00% 4.50% 4.00% 3.50% 3.00% FF 2M 6M 2Y 5Y 7Y 10Y 15Y 20Y 30Y Source: Bloomberg, FHN Financial 23
Slide 24: This is a different cycle
This is a different cycle Change in 10yr Yield before and after first Fed cut Fed starts cutting 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Sep-24 -0.2% Average (past) -0.4% -0.6% 100 days 75 days 50 days 25 days 0 days 25 days 50 days 75 days 100 days Source: Bloomberg, FHN Financial 24
Slide 25: Economy reset expectations for '24, election for '25
Economy reset expectations for ’24, election for ‘25 Market expectations vs FOMC dot plot median 0 1 2 3 4 # 25bp cuts 5 6 7 8 Mkt expected cuts in '24 9 Mkt expected cuts in '25 FOMC median dot end '25 10 11 Jan '24 Feb '24 Mar '24 Apr '24 May '24 Jun '24 Jul '24 Aug '24 Sep '24 Oct '24 Nov '24 Dec
Slide 26: Key takeaways
Key takeaways • The economy enters 2025 in a good place: growth is solid, the labor market seems to have stabilized, and inflation made progress last year. • New federal policies add significant uncertainties to the economic outlook • The timing of any policy changes, whether it be immigration, taxe
Slide 27: Disclaimer
Disclaimer This document or presentation was prepared by an FHN Financial Economist and is not subject to all of the independence and disclosure standards applicable to retail investors. This report may not be independent of FHN Financial’s proprietary interests. FHN Financial sales representatives,
Slide 28: Q&A
Q&A 2) FINANCIAL.
Slide 29: Closing: Sophia Kearney-Lederman
CLOS IN G Sophia Kearney-Lederman Senior Economist FHN Financial 29
Slide 30: Please reach out to your banker with any questions
Please reach out to your banker with any questions or to set up a meeting with our Economist. A recording of this event will be forwarded next week. Next virtual event: March 20 Market Update: Quarterly Conversations 30
Slide 31: Thank you.
Thank you. Py rigs BY HORIZON BANK. FINANCIAL.