First Horizon (FHN) Q2 2024 earnings summary

Executive summary

• Adjusted EPS was $0.36, up $0.01 sequentially, with net income available to common shareholders at $184 million; tangible book value per share increased to $12.22.

• Adjusted return on tangible common equity improved to 12.0%, aided by $212 million in share repurchases in Q2 and $366 million year-to-date.

• Net interest margin expanded to 3.38% as asset yields improved; net interest income rose $4–5 million sequentially.

• Asset quality remained strong with net charge-offs at 0.22% and ACL coverage at 1.41%.

• Navigated a highly competitive deposit environment, with increased promotional offers and deposit cost pressures.

Financial highlights

• Net interest income (NII) increased $4–5 million sequentially, with margin expanding 1 basis point to 3.38%.

• Average loans and leases grew 1–2% sequentially, driven by mortgage and commercial real estate lending.

• Deposit balances declined 1% due to seasonality and money supply contraction, but client retention remained high.

• Fee income, excluding deferred compensation, decreased $3 million sequentially, with fixed income business moderating and mortgage fees rising seasonally.

• Adjusted expenses, excluding deferred comp, remained essentially flat; lower personnel costs were offset by higher marketing and third-party services.

Outlook and guidance

• FY24 net interest income guidance revised to flat to down 2%, reflecting increased deposit competition and mix shift.

• Noninterest income projected to rise 6–10% on fixed income and mortgage rebound; noninterest expense to increase 4–6% due to tech and personnel investments, offset by efficiencies.

• CET1 ratio targeted at ~11.0% for the year, with plans to reassess longer-term targets as macro and regulatory clarity improves.

• Expense base expected to remain flat to down in the back half of the year, offsetting technology investment costs with operational efficiencies.

• Capital ratios expected to remain above well-capitalized standards plus required buffers.