FIRST HORIZON CORP
For the period ended Mar 31, 2025. Filed May 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
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Executive Overview
Significant Events and Transactions
On March 7, 2025, FHN issued $500 million of Fixed Rate/Floating Rate Senior Notes due March 7, 2031. The Senior Notes will bear interest at a rate of 5.514% during the fixed rate period, during which time interest payments are due semi-annually on March 7 and September 7, commencing September 7, 2025 and ending on March 7, 2030. During the floating rate period, the Senior Notes will bear interest at a rate of compounded SOFR plus 1.766% with interest payments due quarterly beginning June 7,
2030 until the maturity date. FHN may redeem the Senior Notes, in whole or in part, from September 3, 2025, until March 7, 2030 (the "Par Call Date"), and in whole, but not in part, on the Par Call Date. The sale of the Senior Notes resulted in net proceeds, before one-time expenses, of approximately $498 million.
Financial Performance Summary
FHN reported first quarter 2025 net income available to common shareholders of $213 million, or $0.41 per diluted share, compared to $158 million, or$0.29 per diluted share, in fourth quarter 2024 and $184 million, or $0.33 per diluted share, in first quarter 2024.
Net interest income of $631 million increased $1 million compared to fourth quarter 2024, driven by lower interest-bearing deposit costs, partially offset by lower loan yields and loan volume. Net interest income increased $6 million compared to first quarter 2024, driven by lower funding costs, partially offset by lower yields on earning assets.
Provision for credit losses was $40 million for first quarter 2025 compared to $10 million for fourth quarter 2024 and $50 million for first quarter 2024. Net charge-offs were $29 million, or 19 basis points, compared to $13 million, or 8 basis points, in fourth quarter 2024, and $40 million, or 27 basis points, in first quarter 2024.
Noninterest income of $181 million increased $82 million compared to fourth quarter 2024, largely driven by securities losses tied to an opportunistic restructuring of a portion of the portfolio in the prior quarter. Noninterest income for first quarter 2025 decreased $13 million, or 7%, compared to first quarter 2024, largely driven by lower deferred compensation income.
Noninterest expense of $487 million decreased $21 million from fourth quarter 2024, largely resulting from lower contributions, outside services, and checking account promotion expenses. Compared with first quarter 2024, noninterest expense decreased $28 million, or 5%, largely reflecting a decrease in personnel expense and lower FDIC special assessment expense, partially offset by $5 million in Visa derivative valuation expense.
Period-end loans and leases of $62.2 billion decreased $350 million, or 1%, from December 31, 2024. Commercial loans declined $356 million from typical seasonal reductions in loans to mortgage companies and reductions in CRE balances from paydowns. Consumer loan growth was $6 million during the first quarter.
Period-end deposits of $64.2 billion decreased $1.4 billion, or 2%, compared to December 31, 2024, largely driven by the pay-off of $559 million in brokered CDs. Interest-bearing deposits decreased $1.2 billion and noninterest-bearing deposits decreased $186 million.
The Common Equity Tier 1 ratio was 10.93% at March 31, 2025 compared to 11.20% at December 31, 2024. Tier 1 risk-based capital and total risk-based capital ratios at March 31, 2025 were 11.95% and 14.06%, down from 12.22% and 14.25% at December 31, 2024.
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PART I, ITEM 2. MANAGEMENT'S DISCUSSION & ANALYSIS (MD&A)
Table of Contents
The following portions of this MD&A focus in more detail on the results of operations for thethree months ended March 31, 2025, the three months ended December 31, 2024, and thethree months ended March 31, 2024 and on
information about FHN's financial condition, loan and lease portfolio, liquidity, funding sources, capital and other matters.
Table I.2.1
KEY PERFORMANCE INDICATORS
| As of or for the three months ended | |||
|---|---|---|---|
| (Dollars in millions, except per share data) | March 31, 2025 | December 31, 2024 | March 31, 2024 |
| Pre-provision net revenue (a) | $325 | $221 | $304 |
| Diluted earnings per common share | $0.41 | $0.29 | $0.33 |
| Return on average assets (b) | 1.11% | 0.82% | 0.97% |
| Return on average common equity (c) | 10.30% | 7.38% | 8.76% |
| Return on average tangible common equity (a) (d) | 12.81% | 9.17% | 10.95% |
| Net interest margin (e) | 3.42% | 3.33% | 3.37% |
| Noninterest income to total revenue (f) | 22.29% | 23.20% | 23.72% |
| Efficiency ratio (g) | 60.06% | 61.98% | 62.92% |
| Allowance for loan and lease losses to total loans and leases | 1.32% | 1.30% | 1.27% |
| Net charge-offs (recoveries) to average loans and leases (annualized) | 0.19% | 0.08% | 0.27% |
| Total period-end equity to period-end assets | 11.10% | 11.09% | 11.21% |
| Tangible common equity to tangible assets (a) | 8.37% | 8.37% | 8.33% |
| Cash dividends declared per common share | $0.15 | $0.15 | $0.15 |
| Book value per common share | $16.40 | $16.00 | $15.23 |
| Tangible book value per common share (a) | $13.17 | $12.85 | $12.16 |
| Common equity Tier 1 | 10.93% | 11.20% | 11.31% |
| Market capitalization | $9,852 | $10,559 | $8,449 |
(a) Represents a non-GAAP measure which is reconciled in the non-GAAP to GAAP reconciliation in Table I.2.23.
(b) Calculated using annualized net income divided by average assets.
(c) Calculated using annualized net income available to common shareholders divided by average common equity.
(d) Calculated using annualized net income available to common shareholders divided by average tangible common equity.
(e) Net interest margin is computed using total net interest income adjusted to an FTE basis assuming a statutory federal income tax rate of 21% and, where applicable, state income taxes.
(f) Ratio is noninterest income excluding securities gains (losses) to total revenue excluding securities gains (losses).
(g) Ratio is noninterest expense to total revenue excluding securities gains (losses).
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