8-K: First Horizon Corporation Reports Full Year 2024 Earnings, Adjusted NIAC Up 5%

First Horizon Corporation announced full year 2024 net income available to common shareholders of $738 million, with adjusted net income increasing 5% to $843 million.

Summary

• First Horizon Corporation reported a full year 2024 net income available to common shareholders of $738 million, or $1.36 per share, compared to $865 million, or $1.54 per share in 2023.
• Adjusted net income available to common shareholders for 2024 was $843 million, or $1.55 per share, a 5% increase from the previous year.
• The fourth quarter of 2024 saw net income available to common shareholders of $158 million, or $0.29 per share, while adjusted net income was $228 million, or $0.43 per share, a 2% increase from the prior quarter.
• The company's net interest margin was 3.35% for the full year, a slight decrease of 7 basis points from 2023.
• Average loan and lease balances increased by $1.8 billion to $62.0 billion, while average deposits grew by 2% to $65.7 billion.
• Net charge-offs decreased to $112 million, or 0.18%, compared to $170 million, or 0.28% in 2023.
• The company returned $604 million of capital to shareholders through share repurchases at an average price of $15.98 per share.
• A securities portfolio restructuring resulted in a $91 million pre-tax loss, but is expected to improve annual net interest income by approximately $35 million.

Sentiment

Score: 6

Explanation: The document presents a mixed picture with positive aspects like adjusted earnings growth and reduced charge-offs, but also negative aspects like decreased net income and a loss from restructuring. The overall sentiment is cautiously optimistic.

Positives

• Adjusted net income available to common shareholders increased by 5% year-over-year.
• Net charge-offs decreased significantly compared to the previous year.
• The company successfully returned a substantial amount of capital to shareholders through share repurchases.
• A strategic securities portfolio restructuring is expected to improve future net interest income.
• The company's CET1 ratio remains strong at 11.2%.

Negatives

• Full year net income available to common shareholders decreased compared to 2023.
• Net interest margin declined slightly year-over-year.
• Noninterest income decreased due to a merger termination fee in 2023.
• A securities portfolio restructuring resulted in a $91 million pre-tax loss.

Risks

• The company's results are subject to interest rate fluctuations, which could impact net interest income.
• Economic conditions and competitive pressures could affect future performance.
• The company's forward-looking statements are subject to various uncertainties and contingencies.
• The company's results are subject to various market and economic risks.

Future Outlook

The company expects a flat to 4% increase in adjusted revenue for 2025, with expense growth between 2% and 4%. They anticipate net charge-offs between 0.15% and 0.25% and a CET1 ratio between 10.5% and 11.0%.

Management Comments

• Our fourth quarter and full-year 2024 results reflect focused execution of our strategic priorities, said Chairman, President and Chief Executive Officer Bryan Jordan.
• Strong client relationships and our attractive business mix positioned us to deliver earnings through a complex interest rate cycle.
• We successfully grew the business in 2024, driven by a strong net interest margin, improved counter-cyclical revenues, and declining net charge-offs.
• I continue to be inspired by our teams dedication to creating value for our shareholders, clients, and communities and remain confident in our ability to continue to deliver profitable growth in 2025, Jordan concluded.

Industry Context

This announcement comes amid a complex interest rate environment, where banks are navigating the impacts of both rising and falling rates. First Horizon's focus on strategic priorities and counter-cyclical revenues is a common theme among regional banks seeking to maintain profitability.

Comparison to Industry Standards

• First Horizon's net interest margin of 3.35% is within the range of other regional banks, but the slight decrease year-over-year indicates the challenges of the current rate environment.
• The company's CET1 ratio of 11.2% is generally considered healthy and above regulatory requirements, similar to other well-capitalized regional banks.
• The reduction in net charge-offs to 0.18% is a positive sign, indicating strong credit quality compared to industry averages.
• The company's share repurchase program is a common strategy among banks with excess capital, similar to actions taken by peers such as Truist and Regions Financial.

Stakeholder Impact

• Shareholders will be impacted by the decrease in net income but will benefit from the share repurchase program.
• Employees will be impacted by the restructuring efforts and strategic investments in personnel.
• Customers will benefit from the company's focus on client relationships and service offerings.
• Creditors will be impacted by the company's capital management and liquidity strategies.

Next Steps

• The company will continue to focus on strategic priorities and profitable growth in 2025.
• The company will continue to manage capital and liquidity prudently.
• The company will continue to monitor and manage credit risk.

Key Dates

Keywords

First Horizon, Financial Results, Net Income, Earnings Per Share, Net Interest Margin, Loan Growth, Deposit Growth, Share Repurchases, Capital Ratios, Asset Quality, Credit Performance, Fee Income, Securities Portfolio, Non-GAAP Measures