First Horizon(US:FHN)2025-10-15 14:32Financial Data and Key Metrics Changes - The company reported an adjusted earnings per share (EPS) of $0.51, a $0.06 increase from the previous quarter, resulting in an adjusted return on tangible common equity (ROTCE) of 15%, up 135 basis points [4][5]. - Net interest income (NII) grew by $33 million, with a 15 basis point expansion in net interest margin (NIM) to 3.55% [5][6]. - The average rate paid on interest-bearing deposits increased to 2.78%, up from 2.76% in the previous quarter [6][7]. Business Line Data and Key Metrics Changes - The loan portfolio saw a slight decrease, with loans to mortgage companies down $132 million, consistent with seasonal trends [7][8]. - The commercial and industrial (C&I) portfolio grew by $174 million quarter-over-quarter, indicating a focus on higher profitability relationships [8][9]. - Fee income increased by $26 million from the prior quarter, driven by improved business conditions and increased customer activity [9][10]. Market Data and Key Metrics Changes - Period-end deposits decreased by $52 million, primarily due to a $652 million decrease in brokered CDs, although non-interest-bearing deposits increased by $131 million [6][7]. - The company retained approximately 97% of the $29 billion in balances associated with clients who had a repricing event during the quarter [6][7]. Company Strategy and Development Direction - The company is focused on achieving sustainable growth and profitability while maintaining safety and soundness [4][15]. - There is an emphasis on integrating technology and processes to deepen client relationships and enhance financial capabilities [15][16]. - The company is optimistic about capitalizing on profitable loan growth opportunities as the Fed initiates rate cuts [15][16]. Management's Comments on Operating Environment and Future Outlook - Management noted a noticeable increase in client confidence and pipeline momentum, although potential impacts from tariff uncertainties remain [15][22]. - The company expects to achieve year-over-year growth in pre-tax pre-provision net revenue (PPNR) and maintain revenue guidance despite a challenging environment [12][14]. - The outlook for charge-offs and taxes remains unchanged, with a target CET1 ratio of 10.75% in the near term [11][13]. Other Important Information - The company accelerated share buybacks to $190 million, repurchasing approximately 8.6 million shares, with over $300 million remaining in buyback authorization [12][13]. - A significant contribution of $20 million to the First Horizon Foundation was made this quarter, maximizing tax advantages [9][12]. Q&A Session Summary Question: How optimistic is the company on growth and is there a noticeable change from a quarter ago? - Management noted increased confidence and noticeable changes in client behavior, with pipelines building throughout the quarter [22]. Question: What is the outlook for the margin in the fourth quarter? - Management indicated that the margin was positively impacted by a one-time adjustment and expects it to stabilize in the high 330s to low 340s range [23]. Question: What is driving the decline in core deposits? - Management explained that the industry is experiencing a mix shift, with clients moving funds into brokerage accounts, and emphasized high retention rates of existing clients [33][35]. Question: What are the company's M&A considerations? - Management reiterated that while near-term priorities remain unchanged, they are open to opportunistic M&A if the right opportunity arises in 2026 or beyond [39][40]. Question: How does the company plan to achieve the 15% ROTCE target? - The company aims to lower capital levels, normalize credit costs, and realize PPNR growth opportunities from existing clients [87][88].