First Horizon Corporation · NYSE:FHN
First Horizon — Investor Day (June 2023)
23 slides from First Horizon's investor day presentation, Jun 6, 2023
Slide 1: First Horizon Investor Day
PS = 20 Purpose driven (am) oF : = Client centered HORIZON Z Value focused —
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. Non-GAAP measures are
Slide 3: Delivering Enhanced Shareholder Value
Delivering Enhanced Shareholder Value
Slide 4: Focused on delivering enhanced shareholder value
Focused on delivering enhanced shareholder value Targeting top-quartile performance to drive enhanced shareholder returns • Diversified business model with highly attractive geographic footprint provides opportunity to deliver outperformance through a variety of economic cycles • Strong balance shee
Slide 5: Diversified model delivers more consistent returns
Diversified model delivers more consistent returns Countercyclical and specialty businesses enhance consistency of revenue over a range of cycles 2017 – 1Q23 Adj. PPNR per share CAGR1,2 • Uniquely positioned to deliver more consistent revenue results through multiple cycles given benefit of counterc
Slide 6: Delivering more consistent return outperformance
Delivering more consistent return outperformance • ~5-year average ROTCE outperformed BKX median by ~75 basis points • ROAA outperformed BKX median by ~7 basis points since 2017 • Delivered more consistent ROAA and ROTCE with less volatility than the peer group • Built $262 million of tangible commo
Slide 7: Top-quartile performance across key metrics
Top-quartile performance across key metrics1 (%) CET1 Ratio2 BKX 13.8 12.5 12.3 11.4 11.3 10.8 10.2 10.1 10.0 9.9 9.9 9.6 9.3 9.3 9.2 9.1 9.1 Median: 8.5 9.9% Peer Peer Peer Peer FHN Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Peer Pro Forma 6.60 NIM 4.22 4.04 3.87 3.57 3.40 3.33 3.3
Slide 8: Strong 1Q23 results highlight diversified business model
Strong 1Q23 results highlight diversified business model ✓ 11.3% pro forma CET1 ratio1 Strong capital position ✓ 430 bps above regulatory capital requirements ✓ CET1 ratio +140 bps above peer median ✓ Attractive interest rate profile - 66% floating rate loans Prudently managed balance sheet ✓ Largel
Slide 9: Demonstrated history of robust capital levels
Demonstrated history of robust capital levels Strong ability to navigate various economic cycles Capital ratios1,2 Capital Ratios1,2 14.5 % • Capital levels well above regulatory minimums 13.3 % 13.6 % 12.6 % 12.3 % • Strong pro forma CET1 ratio of 11.3% provides protection against 12.7% potential f
Slide 10: Strong capital levels
Strong capital levels Lower exposure to unrealized securities losses largely reflects small portfolio size and moderate effective duration • Strong CET1 ratio of 10.4% o Benefit of adjusted NIAC partially offset by a reduction tied to growth in loans and unfunded commitments, and common dividends •
Slide 11: Top tier capital levels
Top tier capital levels Provides flexibility to manage near-term risk with ability to return additional capital in the future Tangible Common Equity/Tangible Assets1,2,3 Total Capital Return Ratio4,5 TCE/TA1 8.2% 71% 6.5% 53% 76% 48% 32% 38% 34% Reflects impact of MOE Pro Forma BKX FY17 FY18 FY19 FY
Slide 12: Balance sheet well-positioned to navigate variability
Balance sheet well-positioned to navigate variability Provides confidence in our ability to continue to drive top-tier performance over medium term $73.9 billion period-end interest-earning assets1 • Asset-sensitivity profile reflects loan mix with 66% floating rate 27% • Expect ~$5.8 billion of fix
Slide 13: Prudently managed portfolio to support liquidity & IRR
Prudently managed portfolio to support liquidity & IRR2 Limited reinvestment of pandemic-related excess cash in FY21 and FY22 to limit duration risk Investment portfolio • 1Q23 securities portfolio ~13% of total assets vs. peer median of ~22%2 ($s in billions) $21.7 o 94% U.S. Government or Agency-b
Slide 14: 1Q23 earning-asset mix reflects more normalized profile
1Q23 earning-asset mix reflects more normalized profile Decision to hold pandemic-related excess cash at Fed reflects disciplined balance sheet management Period-end interest-earning assets1 ($s in billions) • Interest-earning assets decreased $3.4 billion, or 4%, from $82.6 YE20 driven by a $5.9 bi
Slide 15: Attractive deposit and pricing profile
Attractive deposit and pricing profile Quarter-to-date deposits increased through 5/31 driven by strong May Period-end deposit balances • QTD deposits up ~$0.4 billion ($s in billions) $74.9 $70.0 $63.5 o Net deposit growth of ~$1.5 billion in May reflects $61.4 $61.8 37% $60.3 positive momentum acr
Slide 16: Well-diversified and attractive deposit mix
Well-diversified and attractive deposit mix • Client-oriented cost-effective deposits from a diverse commercial and 1Q23 $61.4 billion deposits by state consumer client base AL, 3% TX, 3% LA, GA, 2% o Largely concentrated in the top states and MSAs ranked by NC, 12% AR, 2% 11% population growth in t
Slide 17: Asset sensitive balance sheet delivering strong results
Asset sensitive balance sheet delivering strong results TE NII and NIM Trends1 ($s in millions) $2,804 $2,405 $2,133 $2,006 • TE NII increased $671 million, or 31%, and NIM increased 101 bps to 3.87% from FY20 3.87% 2.86% 3.10% o Reflects benefit of higher short-term rates on floating 2.48% rate loa
Slide 18: Revenue trends reflect benefit of rising rates
Revenue trends reflect benefit of rising rates Higher NII more than offset decreases in countercyclical fixed income and mortgage banking fees • Fee income trends reflect impact of COVID-19 pandemic and rising rates on countercyclical businesses • July 2022 sale of the title business reduced annual
Slide 19: Disciplined expense management mindset
Disciplined expense management mindset Adjusted expense trends1,2 • Annualized expense down $51 million from FY20 ($s in millions) o Benefit of ~$200 million in annualized expense savings tied $1,903 $1,883 $1,852 $1,795 to IBKC merger 13% 11% 13% 15% o Efficiency initiatives helped to mitigate infl
Slide 20: FY23 Outlook
FY23 Outlook Earnings drivers FY22 Adjusted baseline1 FY23 Adjusted Comments expectations Average loans $56 billion Up 3% – 5% Growth rate moderating in 2H23 Assumes 0.25% rate cuts in November and December; Net Interest Income (TE) $2,405 million Up 6% – 9% cumulative interest-bearing deposit betas
Slide 21: 2Q23 Outlook
2Q23 Outlook Earnings drivers 1Q23 Adjusted baseline1 2Q23 Adjusted expectations Comments Net Interest Income (TE) $691 million Down 5% – 7% Assumes no incremental rate hikes; cumulative deposit beta reaches mid-40% Noninterest Income2 $171 million Flat to down 2% ADR below 1Q23 levels of $437k Noni
Slide 22: Focus on driving enhanced shareholder value
Focus on driving enhanced shareholder value ✓ 2017 – 1Q23 adjusted PPNR per share CAGR of 10.4% Deliver outperformance through a variety of ✓ Average 2017-1Q23 ROAA +7 bps above BKX median economic cycles ✓ ROTCE +75 bps above BKX peer median since FY17 ✓ Pro forma CET1 ratio +140 bps above BKX peer
Slide 23: Q&A Session
FIRST HORIZON. Q&A Session INVESTOR DAY NON WO