First Horizon (FHN) Q3 2024 earnings summary

Executive summary

• Adjusted EPS reached $0.42, up 18% sequentially and 56% year-over-year, with net income available to common shareholders at $213 million; tangible book value per share increased $0.81 to $13.02.

• Strong credit performance with net charge-offs at $24 million (0.15% of average loans), and allowance for credit losses coverage at 1.44%, including $8 million in reserves for hurricane-related losses.

• Share repurchases totaled $75 million in Q3 and $441 million year-to-date, with a new $1.0 billion repurchase program approved in October 2024.

• Maintained expense discipline and operational efficiency, with headcount optimization, outsourcing, and adjusted efficiency ratio improving to 59.9%.

• Capital return included a $0.15 common dividend, supported by robust earnings and improved mark-to-market impacts.

Financial highlights

• Net interest income was $631 million, stable sequentially and up year-over-year, with net interest margin at 3.31%, down 7 bps due to higher deposit costs.

• Fee income, excluding deferred compensation, increased, driven by a 22% improvement in fixed income business revenue; total noninterest income rose to $200 million.

• Adjusted pre-provision net revenue was $335 million, up 3% from 2Q24 and 5% from 3Q23.

• Adjusted expenses decreased by $1 million, with personnel costs down due to lower incentives and commissions.

• Notable items reduced results by $0.02 per share, including Visa derivative valuation expenses and restructuring costs.

Outlook and guidance

• Total revenue expected to be flat to up 2% year-over-year, with composition dependent on Fed rate decisions; noninterest expense projected to rise 4–6%.

• Margin expected to fluctuate quarter-to-quarter, with deposit repricing and loan yield dynamics influenced by the pace of rate cuts.

• Net charge-offs anticipated in the 0.25–0.30% range; CET1 ratio targeted at ~11.0%.

• Positive PPNR growth anticipated for 2025, with ongoing efforts to drive both revenue and cost control.

• Capital ratios expected to remain above well-capitalized standards plus the required buffer into 2025.