First Horizon : FHN Goldman Sachs Presentation
FHN
Goldman Sachs Conference
December 10, 2024
1
GAAP Financial Summary
$ in millions except per share data
Reported Results
2018
2019
2020
2021
2022
2023
3Q24
2024 YTD
Net interest income
$1,220
$1,210
$1,662
$1,994
$2,392
$2,540
$627
$1,881
Fee income
$723
$654
$1,492
$1,076
$816
$927
$200
$581
Total revenue
$1,943
$1,864
$3,155
$3,070
$3,208
$3,467
$828
$2,461
Expense
$1,220
$1,233
$1,718
$2,095
$1,953
$2,080
$511
$1,527
Pre-provision net revenue (PPNR)
$723
$631
$1,436
$975
$1,254
$1,388
$316
$935
Provision for credit losses
$9
$45
$503
($310)
$95
$260
$35
$140
Pre-tax income
$714
$586
$933
$1,285
$1,159
$1,128
$281
$795
Income tax expense
$158
$133
$76
$274
$247
$212
$58
$171
Net income
$556
$453
$857
$1,011
$912
$916
$223
$624
Non-controlling interest
$11
$11
$12
$11
$12
$19
$5
$15
Preferred dividends
$6
$6
$23
$37
$32
$32
$5
$28
Net income available to common shareholders (NIAC)
$539
$435
$822
$962
$868
$865
$213
$581
Diluted EPS
$1.65
$1.38
$1.90
$1.74
$1.53
$1.54
$0.40
$1.06
Average diluted shares outstanding
327
316
434
551
566
562
538
548
ROCE
12.7%
9.6%
13.7%
12.5%
11.8%
11.0%
10.1%
9.3%
ROTCE
20.3%
14.7%
19.0%
16.5%
15.6%
14.1%
12.6%
11.6%
ROTCE is a non-GAAP number and is reconciled to GAAP measures in the appendix.
3
Pre-provision net revenue (PPNR) is a non-GAAP measure and is reconciled to pre-tax income (GAAP) in the table.
The First
Horizon
Message
Highly attractive southeast footprint provides opportunity to deliver
2
outperformance through a variety of economic cycles
Our 2025 outlook reflects our confidence in our ability to navigate a range of
4
economic conditions
4
Targeting 15%+ ROTCE, consistent with recent years' performance
Adjusted PPNR
$1.2B
$1.4B
$1.4B
$1.3B
$1.1B
$0.8B
+13%
$0.6B
CAGR
+5%
CAGR
2018
2019
2020
2021
2022
2023
2024 YTD
Annualized
Common Equity Tier 1 11.4%
11.2%
9.8%
9.7%
9.9%
10.2%
9.2%
+146bps
2018
2019
2020
2021
2022
2023
3Q24
Adjusted ROTCE
17.7%
17.6%
19.3%
17.0%
12.2%
13.0%
13.2%
2018
2019
2020
2021
2022
2023
3Q24
includes CECL
day 1 impact
Through multiple economic environments and merger activities, FHN has:
Adjusted ROTCE is non-GAAP and is reconciled to GAAP measures in the appendix.
5
Adjusted pre-provision net revenue (PPNR) is a non-GAAP measure and is reconciled to pre-tax income (GAAP) in the appendix.
Over the last decade, First Horizon's footprint growth reflects a deepening presence in the most desirable markets
3.2x
50+
population growth vs
new producers
1
hired in the last year
national average
top 5
market share in 11 of our top 20 MSAs2
$4.9 trillion
+23%
of deposits
higher GDP growth
in our MSAs2
in our markets vs
national average3
1Source: U.S. Census Bureau, Population Division. Growth is measured from April 1, 2020 to July 1, 2023 for the states in which FHN operates branches excluding NY.
6
2Deposit MSA data source: S&P Capital IQ. Excludes one branch in NY.
3Bureau of Economic Analysis. Real GDP is in millions of chained 2017 dollars. Growth is measured from 2Q23 to 2Q24 for the states in which FHN operates branches excluding NY.
Stable earnings supported by strong, diversified business mix
Deposit generation built around client relationships
Balanced Business Model
Loan expertise creating unique client value
Counter-cyclical businesses provide hedge to asset sensitivity
• Three distinctive counter-cyclical businesses in FHN Financial
PPNR
in millions
$1,222
$1,200
$1,084
$1,000
$347,
28%
$406,
$800
$756
37%
$158,
$875,
$600
21%
72%
$400
$678,
63%
$200
$598,
79%
$1,374
$1,370
FFE
$1,311
$108, 8%
7%
$26, 2%
$74, 6%
$1,267,
6%
92%
5%
$1,236,
4%
94%
$1,344,
3%
98%
2%
1%
(fixed income broker-dealer), mortgage warehouse, and
mortgage lending
• 20%+ PPNR driven by countercyclical businesses during last low
rate environment
$-
0%
2019¹
2020¹
2021
2022
2023
2024 YTD
(pre-
(IBKC in
Annualized
IBKC)
2H20)
All Other Adjusted PPNR
Counter-Cyclicals PPNR²
Avg Fed Funds Effective Rate
Adjusted pre-provision net revenue (PPNR) is a non-GAAP measure and is reconciled to pre-tax income (GAAP) in the appendix. Numbers may not foot due to rounding.
7
12019 and 1H20 are standalone FHN, as the IBKC merger-of-equals did not occur until July 1, 2020.
2Counter-cyclical PPNR includes direct and allocated fees and expenses, as well as net interest income net of funds transfer pricing.
2025 outlook reflects PPNR growth expectations
Earnings Drivers
FY25 vs FY24 Expectations
Comments
Adjusted Revenue
Flat - Up 4%
Composition of revenue will be driven by the quantity and pace of interest rate
cuts. Current outlook assumes 25bps cuts in December 2024 and March, May,
(excluding deferred comp)
and September 2025, as well as modest balance sheet growth.
Adjusted Expense
Up 2% - 4%
Maintain disciplined expense management.
(excluding deferred comp)
Reflects expected commission increases in fixed income trading business.
Net Charge-Offs
0.15% - 0.25%
Continued credit normalization.
Reflects benefit of declining rates.
Tax Rate
21% - 23%
Timing of discrete items impacts quarterly rate.
CET1 Ratio
10.5% - 11.0%
Near term target of 11.0%.
Reflects expectations for modest loan growth
in addition to opportunistic deployment of excess capital.
Adjusted financial measures, including measures excluding deferred compensation, are non-GAAP and are reconciled to GAAP measures in the appendix.
8
Net interest income is adjusted to a fully taxable equivalent ("FTE") basis assuming a statutory federal income tax of 21 percent and, where applicable, state income taxes.
Variability in Deferred Compensation may impact growth rates in noninterest income and noninterest expense but should have an offsetting and immaterial impact on pretax income.
Reconciliation to GAAP financials
Slides in this presentation use non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below.
Quarterly, Unaudited
$s in millions
2024 YTD
2018
2019
2020
2021
2022
2023
3Q24
Annualized
Adjusted Pre-provision Net Revenue (PPNR)
Pre-tax Income (GAAP)
$
714
$
586
$
933
$
1,285
$
1,159
$
1,128
$
281
$
1,062
Provision Expense (GAAP)
9
45
503
(310)
95
260
35
187
Total PPNR (non-GAAP)
$
723
$
631
$
1,436
$
975
$
1,254
$
1,388
$
316
$
1,249
Taxable-equivalent adjustment
9
9
11
12
13
16
4
16
Notable Items (GAAP)
(104)
114
(363)
235
107
(33)
14
47
Adjusted PPNR (non-GAAP)
$
627
$
756
$
1,084
$
1,222
$
1,374
$
1,370
$
335
$
1,311
Numbers may not foot due to rounding.
9
Notable items can be found in the appendices of earnings releases in previously furnished 8-K filings related to the periods shown.
Reconciliation to GAAP financials
Slides in this presentation use non-GAAP information. That information is not presented according to generally accepted accounting principles (GAAP) and is reconciled to GAAP information below.
$s in millions
Quarterly, Unaudited
2024 YTD
2018
2019
2020
2021
2022
2023
3Q24
Annualized
NIAC (GAAP)
$
539
$
435
$
822
$
962
$
868
$
865
$
213
$
581
Plus Tax effected notable items (Non-GAAP) (a)
(78)
90
(294)
179
82
(59)
11
34
Adjusted NIAC (Non-GAAP)
$
461
$
525
$
528
$
1,140
$
950
$
806
$
224
$
615
NIAC (annualized) (GAAP)
g
$
539
$
435
$
822
$
962
$
868
$
865
$
849
$
776
Adjusted NIAC (annualized) (Non-GAAP)
h
461
525
528
1,140
950
806
892
821
Average Common Equity (GAAP)
i
$
4,226
$
4,530
$
6,016
$
7,677
$
7,348
$
7,852
$
8,407
$
8,357
Intangible Assets (GAAP) (b)
1,570
1,575
1,696
1,836
1,777
1,720
1,669
1,680
Average Tangible Common Equity (Non-GAAP)
j
2,656
2,955
4,320
5,841
5,571
6,132
6,738
6,677
Equity Adjustment (Non-GAAP)
(46)
28
23
71
32
81
-
-
Adjusted Average Tangible Common Equity (Non-GAAP)
k
$
2,610
$
2,982
$
4,343
$
5,912
$
5,603
$
6,213
$
6,738
$
6,677
ROCE (GAAP)
g/i
12.7%
9.6%
13.7%
12.5%
11.8%
11.0%
10.1%
9.3%
Adjusted ROCE (Non-GAAP)
h/i
10.9%
11.6%
8.8%
14.9%
12.9%
10.3%
10.6%
9.8%
ROTCE (Non-GAAP)
g/j
20.3%
14.7%
19.0%
16.5%
15.6%
14.1%
12.6%
11.6%
Adjusted ROTCE (Non-GAAP)
h/k
17.7%
17.6%
12.2%
19.3%
17.0%
13.0%
13.2%
12.3%
Numbers may not foot due to rounding. 10
Notable items can be found in the appendices of earnings releases in previously furnished 8-K filings related to the periods shown.
Disclaimer
First Horizon Corporation published this content on December 10, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on December 10, 2024 at 13:25:09.171.