First Horizon Corporation · NYSE:FHN
First Horizon — Q2 2024 Earnings Presentation
29 slides from First Horizon's earnings presentation, Jul 17, 2024
Slide 1: Second Quarter 2024 Earnings
Second Quarter 2024 Earnings July 17, 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: 2Q24 GAAP financial summary
2Q24 GAAP financial summary Reported Results 2Q24 Change vs. $ in millions except per share data 2Q24 1Q24 4Q23 3Q23 2Q23 1Q24 2Q23 Net interest income $629 $625 $617 $605 $631 $4 1% ($2) —% Fee income $186 $194 $183 $173 $400 ($8) (4%) ($214) (54%) Total revenue $815 $819 $800 $778 $1,031 ($4) (1%)
Slide 4: Table of contents
Table of contents 2Q24 highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2Q24 adjusted financial results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Slide 5: Strong 2Q24 results driven by stable, diversified business mix
Strong 2Q24 results driven by stable, diversified business mix Adj. EPS Adj. ROTCE NIM Adj. Efficiency $0.36 12.0% 3.38% 60.5% Earnings & • Adjusted PPNR of $324 million, up $1 million from 1Q24 Returns • Net interest margin expanded 1bp as asset yields continue to improve • Fees excluding deferred
Slide 6: 2Q24 Adjusted financial highlights
2Q24 Adjusted financial highlights $ in millions, Adjusted Results 2Q24 Change vs. • 2Q24 adjusted EPS of $0.36 vs. $0.35 in 1Q24 except per share data 2Q24 1Q24 2Q23 1Q24 2Q23 – Adjusted ROTCE of 12.0%, up 34bps Net interest income (FTE) $633 $628 $635 $5 1% ($2) —% Fee income $186 $194 $175 ($8) (
Slide 7: 2Q24 notable items
2Q24 notable items Pre-Tax Notable Items Notable Items 2Q24 ($ in millions, except EPS) • FDIC special assessment of $2 million, based on revised FDIC Special Assessment ($2) resolution loss totals received from the FDIC in 2Q24 Restructuring expense ($3) • $3 million of restructuring expense primar
Slide 8: NII increased $5 million benefiting from higher loan volumes and yields
NII increased $5 million benefiting from higher loan volumes and yields Net Interest Income ($) and NIM (%) $ in millions NII Margin $635 $621 $628 $633 $609 1Q24 $628 3.37% Loan Volumes & Mix $15 0.04% 3.38% 3.37% 3.38% Loan Rates & Spreads $9 0.05% 3.27% 3.17% Investment Securities & Other $(3) 0.
Slide 9: Deposits trending in line with the industry while DDA remains stable
Deposits trending in line with the industry1 while DDA remains stable Period end deposits • 2Q24 period end deposits of $64.8 billion were down 1% versus 1Q24, in line with the 1% industry decline1 $67.0B $65.4B $65.8B $65.7B $64.8B – Noninterest-bearing balances remained stable from previous quarte
Slide 10: Diversified portfolio across attractive geographic footprint
Diversified portfolio across attractive geographic footprint Period end loans • 2Q24 period end loans of $62.8 billion grew $61.8B $61.8B $62.8B $1.0 billion or 2% versus 1Q24 $61.3B $61.3B $2.7B $2.2B $2.0B $2.4B $2.9B – The spring home buying season drove $568 million higher balances in loans to m
Slide 11: Growth in other banking fees offset anticipated fixed income moderation
Growth in other banking fees offset anticipated fixed income moderation Adjusted Results 2Q24 Change vs. $ in millions 2Q24 1Q24 4Q23 3Q23 2Q23 1Q24 2Q23 Fixed income $40 $52 $37 $28 $30 ($12) (23%) $10 34% Mortgage banking $10 $9 $5 $7 $6 $2 19% $4 66% Service charges and fees $58 $57 $59 $60 $59 $
Slide 12: Expenses stable as lower incentive levels offset strategic investments
Expenses stable as lower incentive levels offset strategic investments Adjusted Results 2Q24 Change vs. $ in millions 2Q24 1Q24 4Q23 3Q23 2Q23 1Q24 2Q23 Salaries and benefits $198 $199 $190 $188 $187 ($1) (1%) $11 6% Incentives and commissions $78 $87 $80 $68 $65 ($9) (10%) $13 20% Deferred compensa
Slide 13: Disciplined lending leads to strong performance across the cycle
Disciplined lending leads to strong performance across the cycle Net charge-offs • 2Q24 net charge-offs of $34 million decreased $6 million $95 – NCO ratio of 0.22%1, which is below the peer average 0.61% 0.53% 0.56% level for the past four quarters2 0.43% 0.45% • Provision expense of $55 million in
Slide 14: Earnings power supports return of capital to shareholders
Earnings power supports return of capital to shareholders • Achieved the near-term CET1 ratio target of 11.0% Capital Ratios – Continued to generate capital through retained earnings, while 13.6% 13.6% 14.0% 13.9% 13.7% supporting customer needs through organic deployment of capital into the loan po
Slide 15: Updated Full Year 2024 Outlook
Updated Full Year 2024 Outlook FY23 Adjusted FY24 Adjusted Earnings Drivers Comments Baseline Expectations Updated: Flat - (2)% Assumes relatively flat balance sheet Net Interest Income $2,556 million in second half of 2024 and Prior: Up 1% – 4% higher level of interest-bearing deposit costs Rebound
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: 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 Fed Funds • FHN Financial provides fixed income sales & trading, Average ADR 6% in$2.0 millions FOMC easing investment advisory, interest rate derivatives and other during GFC services to financial institutions, municip
Slide 19: 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 $35.8 b
Slide 20: High credit quality, diversified CRE portfolio
High credit quality, diversified CRE portfolio Maturity Schedule $6.6B • 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 $3.1B $3.1B • Granular por
Slide 21: 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 48% of office exposure • Average debt service coverage of 1.2x • Only 8 buildings are 10 stories or taller • Average stabilized LTV of 52% • Within the traditional office portfolio1:
Slide 22: 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 23: Investment portfolio prudently managed to support liquidity and IRR
Investment portfolio prudently managed to support liquidity and IRR Investment portfolio • 2Q24 investment portfolio represents ~11% of total assets $10.2B $9.8B $9.4B $9.6B $9.3B – Moderate total portfolio effective duration of 4.9 – Low reliance on HTM designation at ~14% of total portfolio 2.54%
Slide 24: Notable Items
Notable Items $ in millions, except EPS 2Q24 1Q24 4Q23 3Q23 2Q23 Summary of Notable Items: Gain on merger termination $ — $ — $ — $ — $ 225 Net merger/acquisition/transaction-related items — — — — (30) Gain/(loss) related to equity securities investments (other noninterest income) — — (6) — — Net ga
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. $s in millions, except per share data Quarterly, Unaudited 2Q24 1Q24 4Q2
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. $s in millions Quarterly, Unaudited 2Q24 1Q24 4Q23 3Q23 2Q23 Adjusted Di
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. $s in millions Quarterly, Unaudited 2Q24 1Q24 4Q23 3Q23 2Q23 Adjusted No
Slide 28: Reconciliation to GAAP financials
Reconciliation to GAAP financials Slides in this presentation use Non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below. Period-end Average ($s in millions) 2Q24 1Q24 2Q24 vs. 1Q24 2Q24 1Q24 2Q
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 2Q24 1Q24 Adjusted noninterest incom