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    FIRST HORIZON (FHN)

    FHN Q4 2024: $35M NII Boost Drives Q1 Margin Upside

    Reported on Jul 2, 2025 (Before Market Open)
    Pre-Earnings Price$21.39Last close (Jan 15, 2025)
    Post-Earnings Price$21.00Open (Jan 16, 2025)
    Price Change
    $-0.39(-1.82%)
    • Margin Resilience and Near-Term Upside: Executives highlighted that Q4 margin performance—driven by disciplined deposit cost management in a lower rate environment—sets up a strong foundation for continued margin stability and even incremental improvement into Q1.
    • Opportunistic Capital Management: The call detailed an opportunistic securities portfolio restructuring that generated an estimated $35 million annual net interest income pickup, supporting enhanced yield, effective capital allocation, and continued share repurchases.
    • Stable Deposit Base and Client Growth: Analysts noted robust performance in mortgage warehouse lending and disciplined deposit repricing which have stabilized the deposit base, thereby fostering sustainable loan growth and reinforcing earnings stability.
    • Margin Pressure Risk: Q&A comments highlighted uncertainty in sustaining margin improvements due to reliance on successive rate cuts and challenges in fully passing deposit cost declines to loan yields.
    • Credit Risk in CRE: Increased non-performing loans in the CRE segment—specifically, a 4 basis point rise driven by slower multifamily absorption—could signal potential deterioration if conditions worsen.
    • Sluggish Loan Growth Outlook: Guidance indicates only low single-digit loan growth, suggesting that revenue expansion might be limited amid mixed pipeline signals and cautious market sentiment.
    1. Margin Outlook
      Q: Expect margin momentum into Q1?
      A: Management noted that despite the challenges of rate cuts, margins performed well in Q4—thanks to a 34 bps reduction in deposit costs—setting a solid base for Q1 improvements.

    2. Capital Strategy
      Q: Buybacks versus further restructuring?
      A: Leaders described the restructuring as opportunistic, emphasizing that they maintained active share buybacks and strong capital ratios near 11% CET1, while targeting a 15% ROTCE over time.

    3. Operating Leverage
      Q: Extra $35M boost on expenses?
      A: Management explained that disciplined expense control and ongoing 3‑year technology investments reinforce positive operating leverage, underscored by a $35 million annual NII benefit from the securities repositioning.

    4. Lending Growth
      Q: Loan growth low single digit?
      A: They expect loan growth in the low to mid-single digits, driven mostly by commercial and infrastructure segments, with cautious views on CRE paydowns amid a cyclic market.

    5. Regulatory Outlook
      Q: Favorable regulatory changes expected?
      A: Management is optimistic that future regulatory adjustments—especially easing the asset size-related capital requirements—will better reflect their stable risk profile despite crossing critical asset thresholds near $100 billion.

    6. Warehouse Business
      Q: How is mortgage warehouse performance?
      A: They reported strong share gains in mortgage warehouse lending, though seasonal slowdowns are expected; the commercial pipeline is also building modestly, signaling healthy underlying business momentum.

    Research analysts covering FIRST HORIZON.