Executive Summary

Q4 2024 adjusted EPS rose to $0.43, up 2% q/q and 35% y/y, while GAAP EPS was $0.29 as results absorbed a $91M pre-tax loss from an opportunistic AFS securities restructuring; NIM expanded 2 bps to 3.33% as deposit costs fell 34 bps q/q, and net charge-offs declined to 0.08% of loans .
Adjusted NIAC increased to $228M (+2% q/q) despite lower reported revenue ($0.729B), driven by tighter funding costs, strong fixed income revenues, and improving credit metrics; CET1 remained 11.2% after $163M of buybacks and the portfolio restructuring utilization of ~10 bps capital .
The AFS restructuring sold ~$1.2B at 1.9% and reinvested at 5.1%, with an expected ~2.5-year earn-back and ~$35M annual NII uplift—an important 2025 earnings tailwind even as loan yields compress with lower short-term rates .
2025 outlook maintained: total adjusted revenue (ex-deferred comp) flat to up 4%, adjusted expenses up 2–4%, net charge-offs 15–25 bps, tax rate 21–23%, and CET1 targeted at 10.5–11.0% with capacity to deploy excess capital via organic growth and repurchases .
Management highlighted continued momentum into Q1: deposit spot rates ended Q4 at ~2.80%, fixed income ADR improved to $659K, and warehouse lending gained share; near-term catalysts include further deposit repricing, counter-cyclical fee strength, and the restructuring earn-back .

What Went Well and What Went Wrong

What Went Well
- NIM expansion and funding cost relief: average interest-bearing deposit cost fell 34 bps q/q to 3.10% (spot ~2.80%), supporting a 2 bps NIM increase to 3.33% despite lower short rates. “We retained 95% of ~$18B promotional deposits... while achieving a 97 bp reduction in the weighted average rate.”
- Fixed income momentum: ADR rose 11% q/q to $659K and fees increased $3M—benefiting from curve steepening and improved demand as rates fell .
- Credit quality: NCO ratio fell to 0.08% (8 bps) from 15 bps in Q3; provision dropped to $10M; ACL/loans steady at 1.43% .
- Strategic portfolio action: Sold ~$1.2B of securities at 1.9% and reinvested at 5.1%, targeting ~$35M annual NII uplift and ~2.5-year earn-back; “opportunistically deploying ~10 bps of capital” .
What Went Wrong
- Reported revenue and fee pressure: Total revenue fell to $0.729B (–12% q/q; –9% y/y) as GAAP noninterest income declined $101M due to the $91M restructuring loss; service charges and deferred comp also trended lower .
- CRE/NPLs: NPL ratio rose 4 bps q/q to 0.96%, with increases in CRE and consumer real estate; multifamily lease-up timing cited as a driver .
- Expense uptick (adjusted): Adjusted noninterest expense rose $9M q/q (incl. a $10M Foundation contribution), pushing the adjusted efficiency ratio to 61.4% (+157 bps q/q) .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Total Revenue ($USD Billions)	$0.815	$0.828	$0.729
Diluted EPS ($)	$0.34	$0.40	$0.29
Adjusted Diluted EPS ($)	$0.36	$0.42	$0.43
Net Interest Margin (%)	3.38%	3.31%	3.33%
Efficiency Ratio (%)	61.44%	61.89%	61.98%
Net Charge-Off Ratio (%)	0.22%	0.15%	0.08%
CET1 Ratio (%)	11.0%	11.2%	11.2%

Segment performance (Q4 2024)

Segment (Q4)	Total Revenue ($M)	Noninterest Expense ($M)	PPNR ($M)	Provision ($M)	Net Income ($M)
Commercial, Consumer & Wealth	748	362	387	15	284
Wholesale	112	76	36	1	26
Corporate	(131)	71	(202)	(6)	(140)

Key operating KPIs

KPI	Q2 2024	Q3 2024	Q4 2024
Loan Yield (%)	6.34%	6.37%	6.09%
Interest-Bearing Deposit Cost (%)	3.30%	3.44%	3.10%
Nonperforming Loans Ratio (%)	0.91%	0.92%	0.96%
ACL / Loans (%)	1.41%	1.44%	1.43%
Loans / Deposits (period-end, %)	96.89%	93.80%	95.40%
Tangible Book Value per Share ($)	$12.22	$13.02	$12.85
Securities Restructuring (pre-tax, $M)	—	—	(91)
Reinvestment Yield / Earn-back	—	—	5.1% / ~2.5 yrs

Context vs prior year (Q4 y/y): Total revenue down 9% to $0.729B; adjusted EPS up from $0.32 to $0.43; NIM up 6 bps; NCO ratio improved from 0.23% to 0.08% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Revenue (ex-deferred comp)	FY 2025	Flat to +4% (Dec outlook)	Flat to +4%	Maintained
Adjusted Expense (ex-deferred comp)	FY 2025	+2% to +4% (Dec outlook)	+2% to +4%	Maintained
Net Charge-Offs	FY 2025	0.15%–0.25% (Dec outlook)	0.15%–0.25%	Maintained
Tax Rate	FY 2025	21%–23% (Dec outlook)	21%–23%	Maintained
CET1 Target	Near-term	~11% (Dec commentary)	10.5%–11.0%	Maintained emphasis on 10.5–11%
Dividend	Ongoing	$0.15/qtr (Oct declaration)	$0.15/qtr (Jan 28 declaration)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
NIM & Deposit Pricing	Expected modest NIM pressure; deposit spot stepping down; ~$18B promos to reprice	NIM +2 bps to 3.33%; deposit cost –34 bps q/q; spot ~2.80%; retained 95% promos with 97 bp rate cut	Improving/stabilizing
Counter-cyclical (Fixed Income, Mortgage)	Fixed income ADR +22% to $593K, strong momentum	ADR +11% to $659K; fees +$3M; mortgage seasonally softer but warehouse growth	Positive
CRE & Credit	NPLs modestly up; ACL 1.44%; stable trends	NPL ratio +4 bps to 0.96% on multifamily lease-ups; NCOs 8 bps; ACL 1.43%	Stable with manageable pressure
Capital & Buybacks	CET1 11.2%; buybacks ongoing; preparing for >$100B	CET1 11.2%; $163M buybacks; securities restructuring utilized ~10 bps capital; 2025 CET1 target 10.5–11%	Ongoing deployment
Technology Investments	GL/treasury projects completed; client-facing roadmap ahead	Expense guidance includes tech run-rate; focus on efficiency and client experience	Execution phase
Regulatory/Large Bank Cliff	Building infrastructure for >$100B; timeline multi-year	CEO urges tiering, highlights $100B “cliff” concerns	Monitoring
Warehouse Lending	Seasonal strength; funding via brokered deposits	$1.4B in line expansions; share gains; expect seasonal dip Q1 then selling season	Growing

Management Commentary

CEO Bryan Jordan: “Strong client relationships and our attractive business mix positioned us to deliver earnings through a complex interest rate cycle... starting 2025 with positive momentum.”
CFO Hope Dmuchowski on restructuring: “We sold approximately $1.2 billion of securities with an average yield of 1.9% and re-invested at a 5.1% yield… incremental annual impact to NII is expected to be approximately $35 million, resulting in [an] earn-back period of around 2.5 years.”
CFO on deposit repricing: “We retained 95% of the $18 billion of promotional deposits and CDs… while achieving a 97 basis point reduction in the weighted average rate.”
CFO on margin: “We feel strongly about our margin holding up… it sets up nicely for the first quarter.”
CEO on returns: “We remain committed to achieving a 15% return on tangible common equity over the next several years.”

Q&A Highlights

Margin trajectory: Management expects stable NIM with single-digit bps moves as deposit costs continue to step down; Q1 set-up viewed favorably despite uncertainty in the forward curve .
Capital deployment: CET1 near-term target 10.5–11%; buybacks continue with ~$871M authority remaining at Q4-end; restructuring was opportunistic and not a shift away from buybacks .
Warehouse lending outlook: Material share gains in 2024 with $1.4B line expansions; expect typical seasonal softness in Q1, then improvements with the selling season; mortgage mix still purchase-led .
CRE/NPLs: NPL increase concentrated in multifamily lease-ups; >60% of commercial NPLs remain current on payments; ACL calibrated to slightly more favorable macro outlook .
Revenue mix & guidance: Upper-end revenue scenario requires less rate cutting (higher NII) plus sustained fixed income/mortgage activity; expense range tied to variable comp in fee businesses .
Deposit pricing path: Ability to “walk back” rates depends on pace of cuts and competitive dynamics; deposit spot rates already below Q4 average .

Estimates Context

S&P Global Wall Street consensus estimates (EPS and revenue) for Q4 2024 were unavailable due to data access limits at the time of this analysis; as a result, we cannot provide a vs-consensus beat/miss assessment for this quarter.

Key Takeaways for Investors

Funding-cost relief is driving margin stabilization; further spot-to-average convergence in Q1 is a near-term catalyst for NIM and NII stabilization. Bold positive surprise: NIM up 2 bps q/q despite rate cuts .
The $1.2B AFS restructuring should provide a meaningful ~$35M annual NII uplift with ~2.5-year earn-back—supporting operating leverage in 2025 even if rates decline further .
Counter-cyclical engines (fixed income, mortgage) are performing as designed in a falling-rate environment; sustaining ADR strength and mortgage activity can offset some asset-sensitivity pressure .
Credit continues to outperform with NCOs at 8 bps and stable ACL; rising NPLs in CRE appear manageable given payment status and underwriting, limiting downside tail risk near term .
Capital remains a lever: CET1 at 11.2% with active buybacks; management targets 10.5–11% near term and reiterates a path to 15%+ ROTCE over time as capital normalizes and PPNR initiatives scale .
Watch list: pace of Fed cuts (deposit repricing agility vs loan yield compression), CRE lease-up and refi markets (especially multifamily), and sustainability of fixed income ADR momentum into 1H 2025 .

Appendix: Additional Detail (KPIs and Notables)

Q4 notables (pre-tax): $(94)M total, including $(91)M AFS loss, $(3)M restructuring, +$1M FDIC credit; after-tax impact $(71)M or $(0.13) EPS .
Buybacks: $163M in Q4; $604M in 2024 at avg $15.98; $871M authorization remaining under the $1B plan as of Q4 slides .
Deposit mix: Noninterest-bearing stable sequentially; indexed deposits aid down-beta; period-end deposits $65.6B (–$1.0B q/q from brokered CD runoff) .
Segment profitability: Commercial, Consumer & Wealth remains core earnings engine; Wholesale benefited from fixed income; Corporate reflects centralized funding/costs .

FIRST HORIZON CORP (FHN)·Q4 2024 Earnings Summary