Summary of First Horizon Conference Call Company Overview - **Company**: First Horizon (FHN) - **Industry**: Banking Key Points and Arguments Financial Performance - First Horizon had a solid year in 2025, making progress on return targets and returning significant capital while maintaining tight cost discipline [2][5] - The company aims for a return on tangible common equity (ROTCE) of over 15% [5][31] Strategic Focus - The company has streamlined its strategy document from a lengthy format to a concise five to six-page version, enhancing clarity and focus across the organization [3][4] - Emphasis on improving profitability by rotating out less profitable relationships and focusing on core customer bases [2][4] Technology and Efficiency - Significant investments in technology have been made, improving efficiency and effectiveness in operations [2][4][27] - The transition to cloud-based data centers is expected to yield cost savings and operational efficiencies [27] Market Sentiment and Loan Activity - Customer confidence has been increasing, attributed to macroeconomic factors such as tariff adjustments and lower interest rates [6][7] - The bank anticipates originating approximately 60% more loans in 2025 compared to the previous year, indicating strong client sentiment [7] Loan Growth Expectations - Loan growth is expected to normalize to mid-single-digit percentages in 2026, with confidence in commercial and industrial (C&I) lending and mortgage warehouse businesses [8][10] - Commercial real estate (CRE) activity is starting to stabilize after previous declines [9][10] Competitive Landscape - Increased merger activity in the banking sector is seen as an opportunity for First Horizon to attract clients during integration phases of competitors [11][12] - The bank positions itself as a strong commercial middle-market lender, focusing on private client and wealth management to differentiate from competitors [12] Deposit Growth and Management - Deposit balances have remained stable, with good customer activity noted in commercial deposits [13][16] - The bank is managing deposit costs effectively, with expectations for continued growth in deposits to fund loan growth [13][16] Specialty Lending and Countercyclical Businesses - The bank is seeing positive trends in its countercyclical businesses, particularly in mortgage warehouse lending, which has remained steady [18][19] - Equipment leasing and commercial real estate are also highlighted as areas of growth [19][20] Cost Management - The bank aims to maintain flat expenses while investing in technology and talent, with a focus on efficiency [25][27] - A disciplined approach to spending is emphasized to ensure top-quartile returns [27] Capital Allocation and Share Buybacks - First Horizon has repurchased approximately $300 million in shares and plans to continue managing its capital effectively [33][40] - The bank aims to balance capital allocation between supporting loan growth and returning capital to shareholders [40][44] Credit Quality - The bank reports strong credit quality across various lending segments, with optimism for continued positive trends into 2026 [51][53] Future Outlook - The company is focused on driving incremental profitability and enhancing shareholder value through strategic initiatives and operational efficiencies [46][56] - The management remains open to M&A opportunities but prioritizes organic growth and profitability improvements [46][49] Misunderstandings and Opportunities - First Horizon is viewed as a transition story, with significant potential for growth and value creation in the coming years [56] Additional Important Points - The bank's approach to mortgage warehouse lending includes retaining loan documents to mitigate risks, differentiating it from competitors [53] - The management is cautious about the economic outlook, acknowledging potential downside risks while remaining optimistic about credit quality [45][51]

Financial Data and Key Metrics Changes - The company achieved a 32% year-on-year growth in originations and a 33% increase in revenue, generating $248 million in total revenue for the quarter [5][15] - GAAP net income was $38 million, compared to $15 million in the same quarter last year, resulting in a return on tangible common equity (ROTCE) of nearly 12% [5][25] - Non-interest income increased by 60% year-on-year to $94 million, driven by higher originations sold through the marketplace and improved loan sales pricing [19] - Net interest income reached $154 million, up 20% from the previous year, with a net interest margin of 6.1% [20] Business Line Data and Key Metrics Changes - The company originated $2.4 billion in loans during the quarter, a 32% increase year-on-year, with significant contributions from paid marketing initiatives and new product enhancements [14] - The capital-light marketplace business generated the majority of non-interest income, while net interest income from loans held on the balance sheet provided a stable revenue stream [16][18] - The company has quadrupled its balance sheet size since the bank acquisition in 2021, now totaling nearly $11 billion in assets [17] Market Data and Key Metrics Changes - The company extended its forward flow agreement with Blue Owl for up to $3.4 billion in new originations, indicating strong investor demand [6][8] - The marketplace business is expected to continue growing, with a focus on both fulfilling balance sheet growth and meeting investor demand for loans [70] Company Strategy and Development Direction - The company is focused on product innovation and marketing efficiency to drive growth, including the launch of LevelUp checking and LevelUp savings products [11][12] - The strategic goal is to enhance customer engagement and build multi-product relationships, which are expected to lead to better credit outcomes and higher lifetime value [9][10] - The company plans to increase its ROTCE target to a range of 10% to 11.5% for the third quarter, reflecting strong top-line momentum [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to compete effectively in a competitive environment, citing strong growth in originations and marketing efficiency [32][35] - The company has proactively reduced exposure to the student loan population and has not seen any negative impacts from the resumption of student loan payments [44][45] - Management expects to maintain double-digit ROTCE targets into the fourth quarter, with guidance indicating continued financial momentum [46][47] Other Important Information - The company is working on a rebranding initiative to better reflect its expanded product offerings beyond lending [108] - The mobile-first platform is designed to enhance customer experience and streamline interactions, contributing to higher customer engagement [110] Q&A Session Summary Question: What are the competitive dynamics in the market? - Management noted that despite increased competition, the company has maintained strong growth in volume and marketing efficiency, indicating confidence in its competitive positioning [32][35] Question: How should marketing efficiency be modeled going forward? - Management indicated that while marketing efficiency may not remain at current levels, they expect originations to continue to grow, which will influence marketing costs [36][38] Question: What are the trends in credit quality? - Management reported strong credit performance and a lower provision for credit losses, with no significant changes expected from the end of the student loan moratorium [41][44] Question: How does the company view its guidance philosophy? - Management explained that guidance reflects a cautious approach due to macroeconomic uncertainties, but they expect to continue growing volumes and profitability [52][56] Question: What is the outlook for the CET1 ratio and capital deployment? - Management emphasized a focus on growth while being mindful of shareholder dilution, indicating a preference for using existing capital for growth rather than raising new capital [61][63]

Summary of Citigroup (C) 2025 Conference Call Company Overview - **Company**: Citigroup (C) - **Date**: June 10, 2025 - **Speaker**: Viz Raghavan, Head of Banking Key Points Industry Insights - **Investment Banking Landscape**: The investment banking sector is experiencing a renaissance at Citigroup, with notable share gains in M&A and high-grade bond issuance [6][10][11] - **Market Share Growth**: Citigroup's market share in investment banking increased from approximately 4% to 4.5% in 2024, reaching 5.3% in the most recent quarter [10][11] - **High-Grade Bond Issuance**: The surge in high-grade bond issuance was attributed to pre-election corporate funding and acquisition financing [11][12] Strategic Focus - **Talent Investment**: Citigroup is in the early stages of significant talent investment to enhance its banking capabilities [10] - **Private Credit Market**: The private credit market is now mainstream, with a significant amount of capital waiting to be deployed. Citigroup's partnership with Apollo aims to address supply issues in this market [18][22][23] - **Sector Focus**: Key sectors for growth include technology, healthcare, and industrials, which together account for 50-60% of the fee pool [27][62] Financial Performance - **Revenue Growth**: Citigroup expects mid-single-digit growth in banking year-on-year, with mid to high single-digit growth in market activities [43][44] - **Expense Management**: Anticipated expenses for the quarter are expected to increase by $200 million, but overall expenses for the year are expected to align with guidance [45][48] - **Credit Quality**: Over 80% of corporate exposures are high-grade, providing comfort regarding the quality of the credit book [46][47] Market Dynamics - **Client Sentiment**: There is significant anxiety among clients regarding tariffs and supply chain issues, impacting their decision-making processes [32][34] - **M&A Activity**: M&A remains active, driven by both corporate and sponsor engagements, with Citigroup involved in high-profile deals [37][39] - **IPO Market**: The IPO market is currently stagnant, particularly for companies with supply chain concerns, which may lead to increased M&A activity [40][41] Future Outlook - **Return on Tangible Common Equity (ROTCE)**: Citigroup aims to increase ROTCE from around 7% in 2024 to 10-11% in the medium term, driven by revenue growth and improved capital efficiency [58][67] - **Geographical Expansion**: Key markets for growth include the UK, Germany, Middle East, China, and Japan, with a focus on enhancing the commercial banking segment [29][30][62] Additional Considerations - **Cultural Shift**: There is a cultural shift within Citigroup towards a focus on return on capital and overall opportunity costs, rather than just revenue generation [56][58] - **Transformation Dividend**: Citigroup is expected to benefit from a transformation dividend as it optimizes expenses and capital allocation [70][72] This summary encapsulates the key insights and strategic directions discussed during the Citigroup conference call, highlighting the company's focus on growth, market dynamics, and financial performance.