First Horizon Corporation · NYSE:FHN
First Horizon — Q4 2024 Earnings Presentation
31 slides from First Horizon's earnings presentation, Jan 16, 2025
Slide 1: Fourth Quarter 2024 Earnings
Fourth Quarter 2024 Earnings January 16, 2025
Slide 2: Disclaimers
2 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 bel
Slide 3: Reported Results
3TBVPS and ROTCE are non-GAAP and are reconciled to GAAP measures in the appendix. Pre-provision net revenue (PPNR) is a non-GAAP measure and is reconciled to pre-tax income (GAAP) in the table. $ in millions except per share data Reported Results 4Q24 Change vs. Reported Results 2024 change vs. 202
Slide 4: Table of contents
4 4Q24 and 2024 highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4Q24 adjusted financial results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4Q2
Slide 5: 4Q24 and 2024 highlights
5 CET1 ACL to Loans Ratio TBVPS Change FDIC Insured or Collateralized 11.2% 1.43% +6% YoY 66% Adj. EPS Adj. ROTCE Avg. Deposit Growth Avg. Loan Growth Fee Income Growth $1.55 12.5% +2% +3% +10% Adj. EPS Adj. ROTCE NIM ADR Growth NCO % $0.43 13.3% 3.33% +11% 0.08% ROTCE, TBVPS, ACL/loans ratio, and a
Slide 6: 4Q24 adjusted financial results
6ROTCE, TBVPS, ACL to loans ratio, and adjusted financial measures, including measures excluding deferred compensation, are non-GAAP and are reconciled to GAAP measures in the appendix. Adjusted pre-provision net revenue (PPNR) is a non-GAAP measure and is reconciled to pre-tax income (GAAP) in the
Slide 7: 4Q24 notable items
7 4Q24 notable items Notable Items ($ in millions, except EPS) 4Q24 Securities gain/loss ($91) FDIC Special Assessment $1 Restructuring expense ($3) Pre-tax impact of notable items $(94) Tax impact on pre-tax notable items $23 NIAC impact of notable items ($71) EPS impact of notable items ($0.13) Pr
Slide 8: NII and NIM
8 $621 $628 $633 $631 $634 3.27% 3.37% 3.38% 3.31% 3.33% 4Q23 1Q24 2Q24 3Q24 4Q24 Net interest income ($) and NIM (%) Deposit pricing discipline delivered NIM expansion Net interest income and margin are adjusted to a fully taxable equivalent (“FTE”) basis assuming a statutory federal income tax of
Slide 9: Deposits
9 Period end deposits $65.8B $65.7B $64.8B $66.6B $65.6B $17.2 $16.4 $16.3 $16.2 $16.0 $21.2 $19.2 $18.0 $16.3 $16.0 $18.4 $20.1 $20.3 $22.3 $21.5 $7.5 $9.0 $8.0 $9.2 $10.7 $1.4 $1.0 $2.1 $2.5 $1.4 Noninterest bearing deposits Base rate deposits Promotional deposits & CDs Indexed deposits Brokered C
Slide 10: Loans
10 Period end loans • 4Q24 period end loans of $62.6 billion stable versus 3Q24 ◦ Loans to mortgage companies (LMC) continued to capitalize on market share gains, with balances up $227 million ◦ C&I excluding LMC up $110 million, with growth across multiple industry sectors ◦ CRE balances declined $
Slide 11: Fee income
11 • 4Q24 adjusted fee income excluding deferred compensation decreased $5 million from 3Q24 ◦ Fixed income increased $3 million with an average daily revenue (ADR) of $659k, up 11%, driven by the continued momentum from declining short-term interest rates, creating improvement in the shape of the y
Slide 12: Continued demonstration of expense discipline
12 Continued demonstration of expense discipline • 4Q24 adjusted expense, excluding deferred compensation, increased $14 million versus 3Q24, including a $10 million foundation contribution ◦ Personnel expense excluding deferred compensation down $3 million despite increased commissions on higher re
Slide 13: Asset quality: disciplined lending
13 Non-performing loans (NPLs)Allowance for credit losses (ACL) Net charge-offs FHN NCO%1 Average NCO% of BKX Index2 $36 $40 $34 $24 $13 0.23% 0.27% 0.22% 0.15% 0.08% 0.53% 0.56% 0.57% 0.57% 4Q23 1Q24 2Q24 3Q24 4Q24 FHN NCOs Disciplined lending leads to strong performance across the cycle ACL/ loans
Slide 14: Capital ratios
14 Capital Ratios Common Equity Tier 1 (CET1) Tangible Book Value per Share (TBVPS) 14.0% 13.9% 13.7% 13.9% 13.9% CET1 ratio Tier 1 capital ratio Total capital ratio 4Q23 1Q24 2Q24 3Q24 4Q24 Earnings power supports return of capital to shareholders $13.02 $0.32 $(0.15) $(0.29) $(0.10) $0.05 $12.85 3
Slide 15: Earnings Drivers: FY25 expectations
15 Earnings Drivers FY24 Adjusted Baseline FY25 vs FY24 Expectations Comments Adjusted Revenue (excluding deferred comp) $3,279 million Flat - Up 4% Composition of revenue will be driven by the quantity and pace of interest rate cuts. Current outlook assumes 25bps cuts in March, May, and September 2
Slide 16: Key steps to achieving 15%+ ROTCE
16 Strategic capital management to opportunistically deploy excess capital and lower CET1 to 10% - 10.5% range Key steps to achieving 15%+ ROTCE Highly attractive geographic footprint in growth markets with opportunities to drive loan and deposit growth Diversified business model with balance betwee
Slide 17: Appendix
Appendix BS FIRST HORIZON.
Slide 18: Actively managing liquidity and interest rate sensitivity
18 Actively managing liquidity and interest rate sensitivity Variable 56% Fixed 32% ARMs 12% $62.6B Floors 60% Swaps 40% $5.0B Loan repricing profile Balance sheet hedges Modest interest rate sensitivity1 +100bps +1.3% -100bps -2.0% • Modestly asset-sensitive profile driven by 56% variable rate loan
Slide 19: Track record of strong results supported by diversified business mix
19 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, loan
Slide 20: FHN Financial's full-cycle returns counter-cyclical to bank franchise
20 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 —% 2.00% 4.00% 6.00% $0.0 $0.5 $1.0 $1.5 $2.0 FHN Financial’s strong full-cycle returns are counter-cyclical to bank franchise Lower Revenue Market Factor Higher Revenue 2023 Environment 20
Slide 21: High credit quality, diversified CRE portfolio
21 <$5 $3.3B $5-$10 $2.0B $10-$20 $2.7B $20-$30 $2.4B $30-$40 $2.2B $40-$50 $1.3B >$50 $0.6B CRE by property typeCRE by loan size2 CRE by state3 $3.9B $3.1B $2.5B $5.0B Floating Fixed 2025 2026 2027 2028+ High credit quality, diversified CRE portfolio All loan balances are period end unless otherwis
Slide 22: Strong underwriting in office and multi-family portfolios
22 • Medical office comprises 50% of office exposure • Only 12 projects are 10 stories or taller • Total office portfolio vacancy rate of 11% • Within the traditional office portfolio1: ◦ Average debt service coverage of 1.6x ◦ Average stabilized LTV of 59% $2.8 billion office CRE portfolio $5.1 bil
Slide 23: Granular C&I portfolio and real estate backed consumer portfolio
23 C&I by state C&I by industry Consumer portfolio by product 81% 14% 5% Real estate installment loans HELOC Credit card and other Granular C&I portfolio and real estate backed consumer portfolio 20% 20% 12% 11% 9% 7% 6% 6% 4% 4% TN All Other FL TX Other Southeastern NC CA LA GA AL 12% 11% 10% 8% 7%
Slide 24: 4Q24 investment portfolio composition
24 4Q24 investment portfolio composition1 Steady principal cash flows2 Investment portfolio $0.3B $0.3B $0.3B $0.3B 1Q25 2Q25 3Q25 4Q25 Agency MBS 41% Agency CMBS 26% Agency CMO 17% U.S. Agencies & Treasury 12% States & Municipalities 4% $9.4B $9.6B $9.3B $9.4B $9.3B 2.62% 2.54% 2.58% 2.58% 2.69% Av
Slide 25: Notable Items
25 Notable Items Numbers may not foot due to rounding * 4Q24, 3Q24, 2Q24, 1Q24 and 3Q23 include $3 million, $2 million, $3 million, $5 million and $10 million of restructuring expenses; 3Q24 and 2Q23 each include $15 million of Visa derivative valuation expenses and 2Q23 includes a $50 million contr
Slide 26: Reconciliation to GAAP financials
26 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. (a) Adjusted for notable items as detailed on page 25. (b) Includes g
Slide 27: Reconciliation to GAAP financials
27 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 4Q24 3Q24 2Q24 1Q24 4Q23 2024 202
Slide 28: Reconciliation to GAAP financials
28 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 4Q24 3Q24 2Q24 1Q24 4Q23 2024 202
Slide 29: Reconciliation to GAAP financials
29 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 4Q24 3Q24 4Q24 vs. 3Q24 4Q24 3Q24 4
Slide 30: Reconciliation to GAAP financials
30 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. (a) Adjusted for notable items as detailed on page 25. Numbers may no
Slide 31: Reconciliation to GAAP financials
31 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 20242019 2020 2021 2022 2023 Adjusted Pre-provision Ne