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]

First Horizon Corporation Conference Call Summary Company Overview - **Company**: First Horizon Corporation (NYSE:FHN) - **Assets**: $83 billion - **Branches**: Over 400 across the Southeast - **Headquarters**: Memphis, Tennessee - **Segments**: Regional banking, specialty banking, and corporate [1][3] Core Insights and Arguments Customer Sentiment and Loan Growth - Customers in the Southeast are optimistic and resilient despite past challenges like COVID and rising rates [4][5] - Loan growth is slower than previously anticipated, with expectations of high single-digit growth not materializing [5][6] - The mortgage warehouse business has been a bright spot for loan growth [5][8] Loan and Deposit Strategy - Focus on building long-term customer relationships rather than just selling products [7][8] - Emphasis on decentralized decision-making in local markets for deposit pricing [8][9] M&A Activity - Increased M&A activity in the Southeast with several competitors involved in mergers [10][11] - First Horizon has recently completed significant mergers and is now focused on organic growth [12][14] - The company is positioned to capitalize on opportunities arising from competitors' M&A disruptions [12][14] Interest Rate Environment and Asset Sensitivity - The company is optimistic about its countercyclical businesses, particularly FHN Financial, in a falling interest rate environment [17][18] - Mortgage warehouse business is expected to benefit from potential refinancing waves as rates decrease [20][26] Expense Management and Technology Investments - Commitment to keeping expenses flat while investing in technology and efficiency improvements [27][29] - Significant technology investments have been made to clear tech debt and enhance operational efficiency [31][32] - AI is being utilized to reduce costs and improve speed in developing new digital platforms [33][36] Credit Quality and Risk Management - Strong credit culture with a focus on client relationships and decentralized credit analysis [39][40] - Best-in-class charge-off rates, with a proactive approach to monitoring credit quality [41][45] - Increased vigilance regarding fraud and operational controls in response to industry challenges [49][50] ROTCE Target and Capital Management - Achieved a 15% ROTCE in Q4, with a goal to sustain and exceed this level [52][53] - Plans to return capital to shareholders primarily through loan growth, with share buybacks as a secondary option [59][60] - Maintaining a capital ratio of 11% with a long-term target of 10% [57][58] M&A Strategy - M&A is not a near-term priority; focus remains on organic growth and achieving top-tier returns [61][62] - The company is open to opportunities but prioritizes shareholder value and operational efficiency [64] Additional Important Points - The competitive deposit environment has quieted down, with clients aware of rate changes [66][68] - Technology expenses are being managed effectively, with a focus on client-facing projects [70][74] This summary encapsulates the key points discussed during the First Horizon Corporation conference call, highlighting the company's strategic focus, market conditions, and operational insights.