First Horizon National’s Earnings Call Highlights Robust Growth

First Horizon National ((FHN)) has held its Q3 earnings call. Read on for the main highlights of the call.

First Horizon National’s recent earnings call conveyed a generally positive sentiment, underscored by robust EPS growth and notable improvements in net interest income and margin. The company addressed challenges in loan and deposit trends but maintained a strong capital position and continued its share buyback program, despite facing increased expenses.

Strong EPS Growth

First Horizon reported an adjusted EPS of $0.51, reflecting a $0.06 increase from the previous quarter. This growth in earnings per share underscores the company’s effective financial management and operational efficiency, contributing to a positive outlook for investors.

Net Interest Income and Margin Expansion

The company experienced a $33 million increase in net interest income, with the net interest margin expanding by 15 basis points to 3.55%. This improvement was driven by a 14 basis point increase in total loan yield, highlighting the company’s ability to optimize its interest income.

Deposits and Retention

Despite a decline in brokered CDs, First Horizon saw a $131 million increase in noninterest-bearing deposits, achieving a retention rate of approximately 97% for clients with repricing events. This indicates strong client loyalty and effective deposit management strategies.

Capital and Share Buybacks

The company’s CET1 ratio remained stable at 11%, with $190 million in share buybacks completed. With over $300 million remaining in buyback authorization, First Horizon demonstrates a commitment to returning value to shareholders through strategic capital management.

Positive Loan Portfolio Performance

The C&I portfolio showed growth, with period-end balances up by $174 million, and fee income increased by $26 million. This positive performance in the loan portfolio reflects the company’s successful lending strategies and ability to generate additional revenue streams.

Decline in Period-End Loans

There was a slight decrease in period-end loans, with loans to mortgage companies down by $132 million. This decline suggests potential challenges in the mortgage lending segment, which the company may need to address moving forward.

Increased Adjusted Expenses

Adjusted expenses rose by $45 million from the previous quarter, primarily due to higher personnel expenses and contributions to the First Horizon Foundation. While increased expenses pose a challenge, they also reflect the company’s investment in its workforce and community.

Core Deposit Challenges

Core deposits faced an almost 8% decline over the last two quarters, influenced by competitive pressure impacting deposit retention and pricing. This highlights the need for strategic adjustments to bolster deposit growth and retention.

Forward-Looking Guidance

First Horizon’s guidance reflects strong performance metrics, with an increase in adjusted EPS and ROTCE. The company anticipates year-over-year PPNR growth and aims to maintain its revenue and expense guidance, despite potential increases in expenses due to commissions. The credit portfolio showed resilience with a decrease in net charge-offs, and the company remains confident in achieving a sustainable 15% adjusted ROTCE through strategic initiatives.

In summary, First Horizon National’s earnings call conveyed a positive outlook, driven by strong EPS growth and improvements in net interest income. While challenges in loan and deposit trends were acknowledged, the company’s robust capital position and continued share buybacks underscore its commitment to shareholder value. Investors can take confidence in the company’s strategic initiatives aimed at sustaining growth and profitability.