First Horizon National ((FHN)) has held its Q1 earnings call. Read on for the main highlights of the call.
First Horizon National’s recent earnings call revealed a balanced sentiment, showcasing strong operational and financial management while acknowledging challenges posed by macroeconomic uncertainties. The company reported improvements in net interest margin and capital deployment, yet faced increased provisions due to the unpredictable economic landscape.
Net Interest Margin Expansion
First Horizon achieved a notable 9 basis point increase in net interest margin, reaching 3.42%. This improvement was largely driven by a 27 basis point decline in average total deposit costs, highlighting the company’s effective interest rate management.
Strong Capital Management
The company demonstrated strategic capital deployment by repurchasing $360 million of stock in the first quarter. This move reflects a robust capital management strategy, maintaining a CET1 ratio of 10.9%.
Robust Credit Performance
Credit performance remained solid, with a charge-off ratio of 19 basis points, consistent with prior performance. Additionally, the ACL to loans ratio increased to 1.45%, indicating prudent credit risk management.
Expense Reduction
First Horizon successfully reduced expenses by $20 million, excluding deferred compensation. This reduction underscores the company’s commitment to efficient expense management.
Countercyclical Business Strength
The company’s countercyclical businesses provided a natural revenue hedge, supporting earnings stability amidst economic fluctuations, showcasing resilience in uncertain times.
Earnings Per Share Decline
Adjusted EPS saw a slight decline of $0.01 from the prior quarter, reflecting minor pressure on earnings performance, yet maintaining overall financial stability.
Provision Expense Increase
Due to heightened macroeconomic uncertainty, provision expenses increased by $30 million, resulting in a 2 basis point rise in the ACL to loans ratio, reflecting cautious financial planning.
Fee Income Decline
Fee income, excluding deferred compensation, declined by $5 million, impacted by lower brokerage, Wealth and Trust income, and market volatility, indicating areas for potential improvement.
Loan Portfolio Contraction
The loan portfolio contracted by 1% from the prior quarter, influenced by continued paydowns in commercial real estate, showcasing the impact of market conditions on lending activities.
Macroeconomic Uncertainty
Ongoing uncertainties due to tariffs and trade policies contributed to a cautious market outlook, affecting borrower sentiment and investment decisions, emphasizing the need for strategic adaptability.
Forward-Looking Guidance
Looking ahead, First Horizon provided guidance for 2025, reporting an adjusted EPS of $0.42 per share. The company aims for a 15% return on tangible common equity over the intermediate term, emphasizing discipline in deposit pricing and loan growth. Despite macroeconomic challenges, First Horizon remains committed to maintaining strong risk-adjusted credit performance and strategic financial management.
In summary, First Horizon National’s earnings call highlighted a balanced sentiment, with strong operational achievements tempered by macroeconomic challenges. Key takeaways include improvements in net interest margin, strategic capital management, and robust credit performance, alongside challenges such as increased provisions and fee income decline. The company’s forward-looking guidance underscores its commitment to maintaining financial stability and growth amidst uncertainties.