First Horizon (FHN) The BancAnalysts Association of Boston Conference 2026 summary

Strategy and returns

• Five Flags strategy targets $100M of PPNR from the existing client book by deepening relationships and directing balance sheet capacity to higher-return clients.

• 15% ROTCE was framed as a baseline; management expects the mortgage transaction to add at least 150 bps to ROTCE next year, before redeployment benefits.

• Through-cycle underwriting stresses credits for rate moves up 300 bps or declines; margins rank top quartile and charge-offs among the best in the peer set.

• Banker retention is 90%-95%, and client retention is above 90%; hiring continues in Florida, the Carolinas and Texas, with dozens of bankers added this year.

Mortgage portfolio repositioning

• Sold $4.5B of seasoned mortgages, which carried a 3.85% coupon below SOFR; the clients held $200M of deposits, which remained in place. Sale closed at end-October.

• Base case assumes proceeds pay down some wholesale funding and move into securities; management cited 4% EPS accretion, or $45M, and 150 bps of ROTCE next year, with benefits building into 2027.

• About half the proceeds are expected to be redeployed into commercial and specialty client relationships, with loans priced at SOFR+150-250 bps and opportunities to add swaps, wealth and treasury management.

• Mortgage staffing and offices were reduced; the model now emphasizes existing clients and mortgage sales connected to private-client relationships. Management called the portfolio sale a one-time restructuring, with no further sale planned.

Net interest margin and deposits

• About 56%-57% of the balance sheet is asset-sensitive; the first rate increase in late September contributed only one to two weeks of benefit in Q3, while the full-quarter 25-bp increase carries into Q4.

• Mortgage warehouse balances peaked in June rather than the usual September season; Q4 wholesale funding paydowns from the mortgage sale and seasonal runoff support asset yields while deposit costs are maintained.

• Deposit beta target is 60% through the cycle, with bankers asked to reprice 50%-60% rather than pass through the full rate move; commercial deposit pricing also reflects borrowers’ resetting loan costs.

• Q3 deposit-cost pressure reflected seasonal consumer promotions and higher mortgage-warehouse-related wholesale funding, rather than rate competition alone.

• Post-transaction loan-to-deposit ratio is 88%; the next loan growth is expected to be supported by client deposits rather than wholesale funding.