DEFA14A: First Horizon Navigates Challenges, Reports Stable Performance in 2023

First Horizon reports stable financial performance in 2023, driven by strong capital and a dedicated team, despite the termination of a merger and industry-wide challenges.

Summary

• First Horizon faced unforeseen events and banking industry challenges in 2023.
• The company successfully navigated these challenges, maintaining a strong capital and financial position.
• A key deposit campaign attracted over 32,000 new clients and $6 billion in new funds, with a 96% retention rate.
• Net income available to common shareholders was $865 million, or $1.54 per share, compared to $868 million, or $1.53 per share in 2022.
• Tangible book value per share grew by 19%, ending the year at $12.13.
• The board approved a $650 million share repurchase program in January 2024.
• An additional $100 million investment over three years will be made in technology and process improvements.
• The company contributed $50 million to the First Horizon Foundation to support community economic and social health.
• Associates dedicated over 27,000 hours to community service.
• Velia Carboni and John Dietrich were appointed to the board of directors.

Sentiment

Score: 7

Explanation: The document conveys a generally positive sentiment, emphasizing the company's resilience, strong capital position, and successful initiatives. While acknowledging challenges, the overall tone is optimistic and forward-looking.

Positives

• Strong capital and financial position enabled the company to navigate challenges.
• Successful deposit campaign attracted significant new clients and funds.
• High retention rate of key leaders and associates.
• Net interest margin increased by 32 basis points.
• Tangible book value per share showed strong growth.
• Share repurchase program approved, indicating confidence in the company's financial health.
• Investment in technology and process improvements to enhance competitiveness.
• Commitment to community support through the First Horizon Foundation and associate volunteerism.

Negatives

• The termination of the previously announced merger with TD Bank is a setback.
• The company faced a difficult economic environment and unprecedented events in the banking sector.
• 2023 results benefited from a net $59 million after-tax or $0.11 per share of notable items compared with a net reduction of $82 million or $0.15 per share in 2022.

Risks

• The company acknowledges uncertainties and contingencies that could affect future results.
• These include business, operational, economic, and competitive uncertainties.
• The company highlights the importance of safeguarding practices to protect sensitive information, indicating ongoing cybersecurity risks.

Future Outlook

First Horizon enters 2024 from a position of strength, committed to building on its brand and culture, and capitalizing on future opportunities.

Management Comments

• 'Our results in 2023 were driven by two key factors: our strong capital and financial position and our outstanding team.'
• 'We successfully retained 97% of our key leaders and more than 90% of our associate base.'
• 'We leveraged our diversified business model, attractive markets and asset-sensitive balance sheet, while prudently managing capital and risk.'
• 'We are making an additional $100 million investment over three years in technology and process improvements.'

Industry Context

The report highlights the challenges faced by the banking industry in 2023, suggesting that First Horizon's performance is being viewed in the context of broader sector trends and difficulties.

Comparison to Industry Standards

• The document mentions that First Horizon grew both loans and deposits at significantly higher rates than the industry, supported by exceptionally strong capital levels.
• The company maintained a smaller securities portfolio, relative to peers, with a focus on interest rate risk and liquidity.

Management Changes

Stakeholder Impact

• Shareholders benefit from the share repurchase program and strong financial performance.
• Clients benefit from the company's commitment to service and long-term relationships.
• Communities benefit from the company's contributions to the First Horizon Foundation and associate volunteerism.
• Employees benefit from the company's investment in a performance-oriented workplace and collaborative culture.

Next Steps

• Continue to invest in technology and process improvements.
• Publish the next Corporate Social Responsibility and Environmental, Social, Governance Impact Report in mid-2024.
• Execute the $650 million share repurchase program.
• Focus on deepening client relationships and capitalizing on future opportunities.

Key Dates

Keywords

First Horizon, financial performance, net income, deposits, capital, share repurchase, merger termination, banking industry, technology investment, community support