First Horizon(US:FHN)2025-01-16 18:13Financial Data and Key Metrics Changes - The company achieved adjusted EPS growth of $0.12 or 8% from the prior year, with an adjusted return on tangible common equity of 12.6% [11][12] - Net interest margin remained strong at 3.35%, despite declining interest rates in the latter half of the year [11] - The net charge-off ratio for the full year was 18 basis points, a decline of 10 basis points from the prior year [12] Business Line Data and Key Metrics Changes - Average loans grew by over 3% and deposits increased by more than 2% [12] - Fee income, excluding deferred compensation, decreased by $5 million from the prior quarter, with fixed income showing improvements [27] - Period-end loans saw a slight increase, driven by loans to mortgage companies and C&I, offset by commercial real estate payoffs [24] Market Data and Key Metrics Changes - The average rate paid on interest-bearing deposits decreased to 3.10%, down from 3.44% in the third quarter [22] - The spot rate at the end of the year was 2.80%, down over 50 basis points from 3.33% at the end of September [23] - The company retained 95% of the $18 billion of promotional deposits and CDs that repriced in the fourth quarter [21] Company Strategy and Development Direction - The company is focused on maintaining a balanced business model to create a resilient earnings stream across economic environments [35] - The guidance for 2025 includes revenue growth flat to up 4%, with adjusted expenses expected to increase between 2% and 4% [36] - The company aims to achieve a 15% return on tangible common equity over the next several years through efficient capital management [41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the momentum entering 2025, highlighting strong credit performance and the ability to attract new clients [39][41] - The company remains committed to deploying capital and prioritizing organic client growth while evaluating share repurchase opportunities [37] - Management noted that the economic outlook remains volatile, impacting loan growth expectations, particularly in commercial real estate [83][84] Other Important Information - The company returned over $930 million of capital to shareholders through dividends and share repurchases while maintaining robust capital levels [12] - The company completed significant technology investments in 2024, including a new general ledger and treasury management system [150][152] Q&A Session Summary Question: Can you discuss the impact of the securities portfolio restructuring on investment priorities? - Management indicated that the restructuring provides confidence in creating positive operating leverage, but no incremental investments are planned beyond the existing three-year $100 million technology investment [47][49] Question: What are the prospects for the mortgage warehouse business? - Management expressed satisfaction with the growth in the mortgage warehouse lending sector, noting a positive outlook for 2025 despite seasonal slowdowns [54][56] Question: Can you provide insights on near-term margin expectations? - Management feels confident about maintaining margins, citing successful deposit cost decreases despite rate cuts [66][71] Question: What are the loan growth assumptions for 2025? - The company anticipates low-single-digit to mid-single-digit loan growth, tempered by expectations in commercial real estate [81][83] Question: How does the company view capital management and potential for lower CET1 ratios? - Management discussed the importance of economic conditions and portfolio performance in determining capital levels, with a focus on maintaining a CET1 ratio around 10.5% [96][98]