First Horizon(FHN) - 2025 Q2 - Quarterly Results

First Horizon Corporation Second Quarter 2025 Results Executive Summary and Highlights First Horizon reported strong Q2 2025 results, with net income available to common shareholders rising to $233 million Financial Performance Summary | Metric | 2Q25 (Actual) | 1Q25 (Actual) | Change (QoQ) | Change (QoQ %) | | :--- | :--- | :--- | :--- | :--- | | Net Income Available to Common Shareholders (NIAC) | $233 million | $213 million | +$20 million | +9.4% | | EPS (Diluted) | $0.45 | $0.41 | +$0.04 | +9.8% | | Adjusted NIAC (Excl. Notable Items) | $229 million | $217 million | +$12 million | +5.5% | | Adjusted EPS (Excl. Notable Items) | $0.45 | $0.42 | +$0.03 | +7.1% | - The CEO expressed satisfaction with the strong performance, attributing it to the company's commitment to safety, soundness, profitability, and growth[2][3] Notable Items Summary | Notable Items (Pre-tax) | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Deferred compensation adjustment | $4 | — | — | | FDIC special assessment | $1 | ($1) | ($2) | | Other notable expenses | — | ($5) | ($3) | | Total notable items (pre-tax) | $4 | ($6) | ($5) | | Total notable items (after-tax) | $3 | ($4) | ($11) | Quarterly Financial Performance Analysis (2Q25 vs 1Q25) Net interest income grew from loan expansion, while noninterest income and expense both rose due to deferred compensation adjustments Key Financial Metrics (QoQ) | Metric | 2Q25 | 1Q25 | Change (QoQ) | | :--- | :--- | :--- | :--- | | Net Interest Income (FTE) | $645 million | $634 million | +$10 million | | Net Interest Margin | 3.40% | 3.42% | -2 basis points | | Noninterest Income | $189 million | $181 million | +$7 million | | Adjusted Noninterest Income | $189 million | $181 million | +$7 million | | Noninterest Expense | $491 million | $488 million | +$3 million | | Adjusted Noninterest Expense | $495 million | $482 million | +$14 million | - Net interest income increase was primarily driven by loan portfolio growth, while the net interest margin decrease was due to higher deposit costs[7] - Noninterest income growth was largely due to a $10 million increase in deferred compensation income, partially offset by a $7 million decline in fixed income revenue[8] - Adjusted noninterest expense increased by $14 million, including $9 million in higher deferred compensation and $7 million in outside services[9] Summary Results Tables Summary results show a 9% quarter-over-quarter increase in net income, with improvements in key return and efficiency metrics Income Statement (in millions) | Income Statement (in millions) | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 ($) | Change vs. 1Q25 (%) | Change vs. 2Q24 ($) | Change vs. 2Q24 (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net interest income (taxable equivalent) | $645 | $634 | $633 | $10 | 2% | $12 | 2% | | Noninterest income | $189 | $181 | $186 | $7 | 4% | $3 | 1% | | Total revenue | $830 | $812 | $815 | $17 | 2% | $15 | 2% | | Noninterest expense | $491 | $488 | $500 | $3 | 1% | ($9) | (2)% | | Pre-provision net revenue | $339 | $325 | $315 | $14 | 4% | $24 | 8% | | Provision for credit losses | $30 | $40 | $55 | ($10) | (25)% | ($25) | (45)% | | Net income available to common shareholders | $233 | $213 | $184 | $20 | 9% | $49 | 27% | | EPS | $0.45 | $0.41 | $0.34 | $0.04 | 10% | $0.11 | 32% | Key Performance Metrics | Key Performance Metrics | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 (bp) | Change vs. 2Q24 (bp) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net interest margin | 3.40% | 3.42% | 3.38% | (2)bp | 2 bp | | Efficiency ratio | 59.20% | 60.06% | 61.44% | (86)bp | (224)bp | | Return on average assets | 1.20% | 1.11% | 1.00% | 9 bp | 20 bp | | Return on average common equity ("ROCE") | 11.1% | 10.3% | 9.0% | 84 bp | 216 bp | | Return on average tangible common equity ("ROTCE") | 13.8% | 12.8% | 11.3% | 104 bp | 256 bp | | Common Equity Tier 1 | 11.0% | 10.9% | 11.0% | 7 bp | (5)bp | | Nonperforming loan and leases ratio | 0.94% | 0.98% | 0.91% | (4)bp | 3 bp | | Net charge-off ratio | 0.22% | 0.19% | 0.22% | 3 bp | — bp | Average Balance Sheet (in billions) | Balance Sheet (in billions) | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 ($) | Change vs. 1Q24 ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Average loans | $62.6 | $61.6 | $62.0 | $0.9 | $0.5 | | Average deposits | $64.7 | $64.5 | $65.0 | $0.2 | ($0.2) | | Average assets | $82.0 | $81.0 | $81.7 | $1.0 | $0.2 | Adjusted Financial Data & Notable Items Adjusted financial data reflects a positive impact from notable items, leading to higher adjusted net income and EPS Adjusted Financial Data (in millions) | Adjusted Financial Data (in millions) | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 ($) | Change vs. 2Q24 ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Adjusted total noninterest income | $189 | $181 | $186 | $7 | $3 | | Adjusted total noninterest expense | $495 | $482 | $495 | $14 | $1 | | Adjusted pre-provision net revenue | $338 | $334 | $324 | $4 | $14 | | Adjusted net income available to common shareholders | $229 | $217 | $195 | $12 | $34 | | Adjusted diluted EPS | $0.45 | $0.42 | $0.36 | $0.03 | $0.09 | | Adjusted ROTCE | 13.6% | 13.1% | 12.0% | N/A | N/A | | Adjusted efficiency ratio | 59.5% | 59.1% | 60.5% | N/A | N/A | Summary of Notable Items (in millions) | Summary of Notable Items (in millions) | 2Q25 | 1Q25 | 4Q24 | 3Q24 | 2Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Loss on AFS portfolio restructuring | — | — | ($91) | — | — | | Deferred compensation adjustment | $4 | — | — | — | — | | FDIC special assessment | $1 | ($1) | $1 | $2 | ($2) | | Other notable expenses | — | ($5) | ($3) | ($17) | ($3) | | Total notable items (pre-tax) | $4 | ($6) | ($94) | ($14) | ($5) | | Net income/(loss) available to common shareholders impact | ($3) | $4 | $71 | $11 | $11 | | EPS impact of notable items | — | $0.01 | $0.13 | $0.02 | $0.02 | - Second quarter notable items included a $1 million expense credit for the FDIC special assessment and a $4 million expense credit from deferred compensation[5] Financial Ratios Q2 2025 financial ratios demonstrated improved profitability and capital strength, with higher returns and a stronger CET1 ratio Key Financial Ratios | Financial Ratios | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 (bp) | Change vs. 2Q24 (bp) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net interest margin | 3.40% | 3.42% | 3.38% | (2)bp | 2 bp | | Return on average assets | 1.20% | 1.11% | 1.00% | 9 bp | 20 bp | | Return on average common equity ("ROCE") | 11.14% | 10.30% | 8.98% | 84 bp | 216 bp | | Return on average tangible common equity ("ROTCE") | 13.85% | 12.81% | 11.29% | 104 bp | 256 bp | | Efficiency ratio | 59.20% | 60.06% | 61.44% | (86)bp | (224)bp | | Allowance for credit losses to loans and leases | 1.42% | 1.45% | 1.41% | (3)bp | 1 bp | | Nonperforming loan and leases ratio | 0.94% | 0.98% | 0.91% | (4)bp | 3 bp | | Net charge-off ratio | 0.22% | 0.19% | 0.22% | 3 bp | — bp | Capital Data | Capital Data | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 (bp) | Change vs. 2Q24 (bp) | | :--- | :--- | :--- | :--- | :--- | :--- | | Common Equity Tier 1 | 11.0% | 10.9% | 11.0% | 7 bp | (5)bp | | Tier 1 capital ratio | 12.0% | 11.9% | 12.1% | 6 bp | (4)bp | | Total capital ratio | 14.0% | 14.1% | 14.0% | (9)bp | (7)bp | | Tier 1 leverage ratio | 10.6% | 10.5% | 10.6% | 7 bp | (5)bp | | Risk-weighted assets (billions) | $71.7 | $70.8 | $71.9 | $0.9 | ($0.3) | | Tangible common equity/tangible assets ("TCE/TA") | 8.58% | 8.37% | 8.14% | 21 bp | 44 bp | Selected Balance Sheet Data | Selected Balance Sheet Data | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 | Change vs. 2Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Book value per common share | $16.78 | $16.40 | $15.34 | +$0.37 | +$1.44 | | Tangible book value per common share | $13.57 | $13.17 | $12.22 | +$0.40 | +$1.35 | | Full-time equivalent associates | 7,255 | 7,190 | 7,297 | +65 | -42 | Consolidated Balance Sheet The Q2 2025 balance sheet expanded, with asset and deposit growth driven by loans to mortgage companies and brokered deposits Period-End Balance Sheet (in millions) | Period-End Balance Sheet (in millions) | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 ($) | Change vs. 2Q24 ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total assets | $82,084 | $81,491 | $82,230 | $592 | ($147) | | Loans and leases, net of unearned income | $63,260 | $62,215 | $62,781 | $1,045 | $479 | | Total deposits | $65,576 | $64,208 | $64,794 | $1,369 | $783 | | Total interest-bearing deposits | $49,685 | $48,373 | $48,446 | $1,312 | $1,239 | | Noninterest-bearing deposits | $15,892 | $15,835 | $16,348 | $57 | ($457) | | Total liabilities | $72,826 | $72,447 | $73,275 | $379 | ($449) | | Total shareholders' equity | $9,257 | $9,044 | $8,955 | $213 | $302 | | Loans to mortgage companies | $4,058 | $3,369 | $2,934 | $689 | $1,124 | Average Balance Sheet (in millions) | Average Balance Sheet (in millions) | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 ($) | Change vs. 2Q24 ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total assets | $81,958 | $80,965 | $81,721 | $993 | $237 | | Loans and leases, net of unearned income | $62,551 | $61,645 | $62,029 | $906 | $523 | | Total deposits | $64,742 | $64,504 | $64,960 | $238 | ($218) | | Total interest-bearing deposits | $48,891 | $48,970 | $48,629 | ($78) | $263 | | Noninterest-bearing deposits | $15,851 | $15,535 | $16,332 | $317 | ($481) | | Total liabilities | $72,861 | $71,854 | $72,772 | $1,007 | $89 | | Total shareholders' equity | $9,097 | $9,111 | $8,949 | ($14) | $148 | | Loans to mortgage companies | $3,533 | $2,819 | $2,440 | $714 | $1,093 | - Period-end loans and leases increased by $1.0 billion, with Loans to Mortgage Companies contributing $689 million[10][38] - Period-end deposits increased by $1.4 billion, primarily driven by a $1.6 billion increase in brokered deposits[11][38] Consolidated Net Interest Income and Average Balance Sheet: Yields and Rates Net interest income increased due to loan growth and higher yields, though the net interest margin compressed slightly from rising deposit costs Net Interest Income and Margin Analysis | Metric (in millions, except rates) | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 ($) | Change vs. 2Q24 ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Interest income | $1,047 | $1,017 | $1,097 | $30 | ($50) | | Interest expense | $403 | $383 | $464 | $20 | ($61) | | Net interest income - tax equivalent | $645 | $634 | $633 | $10 | $12 | | Net interest income | $641 | $631 | $629 | $10 | $12 | | Total loan yield | 5.92% | 5.89% | 6.34% | +3 bp | -42 bp | | Total deposit cost | 2.09% | 2.07% | 2.47% | +2 bp | -38 bp | | Net interest margin | 3.40% | 3.42% | 3.38% | -2 bp | +2 bp | - Commercial loan yields increased to 6.21% from 6.18% QoQ, contributing to the overall loan yield increase[41] - Interest-bearing deposit costs rose, with savings deposit cost at 2.73% (up 6 bp) and time deposit cost at 3.88% (down 12 bp) from 1Q25[41] Consolidated Asset Quality Asset quality improved in Q2 2025, marked by lower nonperforming loans and a decreased provision for credit losses Asset Quality Metrics (in millions) | Asset Quality Metric (in millions) | 2Q25 | 1Q25 | 2Q24 | Change vs. 1Q25 ($) | Change vs. 2Q24 ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total nonperforming loans and leases | $593 | $609 | $574 | ($17) | $19 | | Nonperforming loans and leases to loans and leases | 0.94% | 0.98% | 0.91% | -4 bp | +3 bp | | Total loans and leases 90 days or more past due and accruing | $8 | $8 | $6 | $0 | $3 | | Total net charge-offs | $34 | $29 | $34 | $5 | $0 | | Total loans and leases annualized net charge-off rate | 0.22% | 0.19% | 0.22% | +3 bp | +0 bp | | Allowance for loan and lease losses - ending | $814 | $822 | $821 | ($8) | ($7) | | Reserve for unfunded commitments - ending | $87 | $83 | $66 | $4 | $21 | | Total allowance for credit losses - ending | $901 | $905 | $887 | ($4) | $14 | | Total allowance for credit losses to loans and leases | 1.42% | 1.45% | 1.41% | -3 bp | +1 bp | | Total allowance for credit losses to nonperforming loans and leases | 152% | 148% | 155% | +4% | -3% | - Provision expense decreased by $10 million to $30 million from the previous quarter[12] - Nonperforming loans decreased by $17 million, with an increase in C&I offset by reductions in commercial real estate[12] - The ACL to loans ratio decreased to 1.42%, primarily due to a higher balance of loans to mortgage companies and positive net risk grade migration[12] Segment Reporting Segment performance was varied, with Commercial, Consumer, and Wealth showing increased net income, while Wholesale saw loan growth Commercial, Consumer, and Wealth Segment (in millions) | Metric | 2Q25 | 1Q25 | Change vs. 1Q25 ($) | Change vs. 1Q25 (%) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $634 | $624 | $10 | 2% | | Noninterest income | $113 | $110 | $3 | 3% | | Total revenue | $747 | $734 | $13 | 2% | | Net income | $289 | $268 | $21 | 8% | | Total loans and leases (Avg) | $56.3B | $56.2B | $0.1B | 0% | | Return on average assets | 1.98% | 1.85% | +13 bp | N/A | | Efficiency ratio | 47.43% | 46.85% | +58 bp | N/A | Wholesale Segment (in millions) | Metric | 2Q25 | 1Q25 | Change vs. 1Q25 ($) | Change vs. 1Q25 (%) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $57 | $50 | $8 | 15% | | Noninterest income | $53 | $59 | ($6) | (10)% | | Total revenue | $111 | $109 | $2 | 1% | | Net income | $22 | $23 | $0 | (2)% | | Total loans and leases (Avg) | $5.8B | $5.0B | $0.8B | 16% | | Fixed income product average daily revenue (thousands) | $550 | $586 | ($35) | (6)% | | Efficiency ratio | 68.29% | 69.58% | (129)bp | N/A | Corporate Segment (in millions) | Metric | 2Q25 | 1Q25 | Change vs. 1Q25 ($) | Change vs. 1Q25 (%) | | :--- | :--- | :--- | :--- | :--- | | Net interest income/(expense) | ($50) | ($42) | ($8) | (18)% | | Noninterest income | $22 | $12 | $10 | 84% | | Total revenues | ($28) | ($30) | $2 | 8% | | Net income/(loss) | ($67) | ($69) | $2 | 2% | | Interest bearing assets (Avg) | $11.0B | $10.8B | $0.2B | 1% | - The Commercial, Consumer, and Wealth segment offers traditional lending, deposit taking, investment, and wealth management services[56] - The Wholesale segment focuses on specialized product offerings like mortgage warehouse lending and fixed income securities sales[59] - The Corporate segment manages corporate support functions, centralized capital and funding, and includes run-off businesses[62] Non-GAAP to GAAP Reconciliations This section provides detailed reconciliations of non-GAAP financial measures to their most comparable GAAP measures for transparency Tangible Common Equity (Non-GAAP) (in millions) | Metric | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Total equity (GAAP) | $9,257 | $9,044 | $8,955 | | Total common equity | $8,536 | $8,322 | $8,234 | | Intangible assets (GAAP) | $1,633 | $1,643 | $1,674 | | Tangible common equity (Non-GAAP) | $6,903 | $6,680 | $6,560 | | Total assets (GAAP) | $82,084 | $81,491 | $82,230 | | Tangible assets (Non-GAAP) | $80,451 | $79,849 | $80,556 | | Tangible common equity to tangible assets ("TCE/TA") | 8.58% | 8.37% | 8.14% | | Tangible book value per common share | $13.57 | $13.17 | $12.22 | Adjusted Diluted EPS & ROA (in millions, except per share data) | Metric | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Net income available to common shareholders (GAAP) | $233 | $213 | $184 | | Adjusted net income available to common shareholders (Non-GAAP) | $229 | $217 | $195 | | Diluted EPS (GAAP) | $0.45 | $0.41 | $0.34 | | Adjusted diluted EPS (Non-GAAP) | $0.45 | $0.42 | $0.36 | | Net Income ("NI") (GAAP) | $244 | $222 | $204 | | Adjusted NI (Non-GAAP) | $241 | $227 | $208 | | ROA (GAAP) | 1.20% | 1.11% | 1.00% | | Adjusted ROA (Non-GAAP) | 1.18% | 1.14% | 1.02% | Adjusted Efficiency Ratio (in millions) | Metric | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Noninterest expense (GAAP) | $491 | $488 | $500 | | Adjusted noninterest expense (Non-GAAP) | $495 | $482 | $495 | | Revenue (GAAP) | $830 | $812 | $815 | | Adjusted revenue (Non-GAAP) | $833 | $816 | $819 | | Efficiency ratio (GAAP) | 59.20% | 60.06% | 61.44% | | Adjusted efficiency ratio (Non-GAAP) | 59.47% | 59.09% | 60.47% | Glossary of Terms This section defines key financial, regulatory, and operational terms used throughout the report to ensure clarity - Definitions are provided for key capital, profitability, and asset quality ratios, including CET1, FTE, ROA, ROCE, ROTCE, and NPL ratios[78][79][80][81][82][83] - Operating segments are defined as Commercial, Consumer, and Wealth; Wholesale; and Corporate, outlining their respective services and focus areas[84][85][86] General Information This section provides disclosures on forward-looking statements, non-GAAP measures, and conference call information - The document contains forward-looking statements subject to significant business, operational, economic, and competitive uncertainties[17] - Certain non-GAAP measures are used by management to understand financial condition and are reconciled to GAAP measures[19][20][21][22] - Conference call details for July 16, 2025, including dial-in numbers, webcast link, and replay information, are provided[23][24] - First Horizon Corporation (NYSE: FHN) is a leading regional financial services company with $82.1 billion in assets as of June 30, 2025[25]