FIRST HORIZON CORP Q3 FY2024 earnings call

• Hurricane Response: Supported communities impacted by hurricanes Helene and Milton, with banking centers mostly back open and financial commitments to recovery. - Financial Highlights: Adjusted EPS $0.42, up $0.06 from prior quarter. Pre-provision net revenue up $11 million. Adjusted return on tangible common equity 13.2%. Common equity Tier 1 ratio 11.2%. - Notable Items: Reduced results by $0.02 per share due to $2 million credit to expenses, $15 million visa derivative valuation expenses, $2 million restructuring expenses. - Deposit and Loan Activity: Deposit balances up 3%, driven by client acquisition. Loan yields expanded, but net interest margin compressed. Commercial real estate portfolio balances stabilized. - Operational Efficiencies: Optimized retail staffing model, outsourced property management, aiming for operational efficiency.

Net Interest Income (NII): $631 million, relatively stable to prior quarter. Net interest margin compressed to 3.31% with better asset yields partially offsetting higher deposit costs. Fee Income: Fixed-income business had $47 million in fees, with August and September showing stronger momentum than July. Other non-interest income increased $5 million due to non-recurring items. Expenses: Excluding deferred compensation, adjusted expenses decreased by $1 million. Personnel costs down, and operational efficiency initiatives implemented. Credit Performance: Net charge-offs at $24 million (15 basis points of average loans), loan loss provision $35 million, ACL coverage at 1.44% including $8 million for Hurricane Helene.

• Revenue: Total revenue flat to up 2% year-over-year, depending on Fed rate actions. - Expenses: Guidance unchanged, focused on identifying efficiencies. - Net Charge-offs: Trending favorably but range unchanged pending weather event impact assessment. - CET1 Ratio: Target 11%, currently at 11.2% due to late quarter portfolio sale. - Fixed Income Business: Potential for continued momentum in decreasing rate environment.

• Weather Events: Impact on potential losses from hurricanes Helene and Milton, uncertainty around reserve build. - Interest Rate Volatility: Impact on net interest margin and revenue, particularly with lag between loan and deposit repricing. - Regulatory and Market Uncertainties: Impact on capital, lending activity, and franchise growth.

Q: Talk about fixed income business and margin compression.

A: Hope Dmuchowski mentions potential upside in decreasing rate environment.

Q: Loan to deposit ratio and deposit pricing.

A: Hope Dmuchowski discusses monitoring loan to deposit ratio and deposit pricing strategy.

Q: Loan growth expectations.

A: Bryan Jordan talks about muted loan growth in marketplace, optimism for pent-up demand.

Q: Deposit pricing and brokered deposits.

A: Hope Dmuchowski discusses deposit pricing changes and brokered deposit strategy.

Q: CET1 ratio and buybacks.

A: Bryan Jordan talks about capital and buyback authorization.

Q: Mortgage outlook and revenue guide.

A: Hope Dmuchowski discusses mortgage rate impact and revenue guide variability.

Q: Commercial real estate paydowns.

A: Thomas Hung and Hope Dmuchowski discuss commercial real estate paydowns and their impact.

Q: Shared national credit exam and operational losses.

A: Thomas Hung and Hope Dmuchowski discuss credit exam and operational losses.