FHN — First Horizon Corporation

First Horizon (FHN) Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Adjusted Earnings Per Share (EPS): Increased by $0.09 year-over-year to $0.54, representing a 20% rise.
• Adjusted Pre-Provision Net Revenue (PPNR): Grew by 8% year-over-year to $364 million.
• Loan Balances: Increased by approximately $2 billion compared to Q2 2025, with period-end loans up $953 million from the prior quarter.
• Net Interest Income (NII): Grew by $9 million, with a net interest margin (NIM) settling in the high 340s, reflecting a 3 basis point compression.
• Deposits: Period-end balances rose by $1.6 billion, driven mainly by brokered deposits. The average rate on interest-bearing deposits increased to 2.33%.
• Credit Metrics: Net charge-offs rose by $4 million to $33 million, with a net charge-off ratio of 20 basis points. The allowance for credit losses (ACL) to loan ratio declined to 1.24%.

2. Strategic Updates and Business Highlights

• The bank is focused on building long-term client relationships and investing in people, products, and services.
• Continued growth in commercial loans, particularly in commercial and industrial (C&I) loans and commercial real estate (CRE).
• Wealth management and increased brokerage, trust, and insurance income contributed positively to fee income, despite a slight decline in fixed income revenues due to macroeconomic volatility.
• The bank is actively managing expenses, with a focus on maintaining flat expenses moving forward while investing in talent and technology.

3. Forward Guidance and Outlook

• The bank reiterated its full-year expectations, maintaining a positive outlook for continued growth in PPNR and loan balances.
• Management expects deposit costs to remain competitive, with potential increases in the second half of the year depending on interest rate movements.
• The bank is optimistic about achieving its $100 million PPNR opportunity, with ongoing investments in various business lines.

4. Bad News, Challenges, or Points of Concern

• NIM Compression: The bank anticipates continued pressure on NIM due to rising deposit costs, which may impact profitability.
• Market Competition: Increased competition for deposits and loans remains a concern, with management noting that deposit costs are expected to rise in the competitive environment.
• Economic Uncertainty: Ongoing geopolitical tensions and macroeconomic volatility could impact fixed income revenues and overall market conditions.
• Credit Quality Monitoring: While credit metrics are currently stable, management is closely monitoring consumer-sensitive sectors like trucking, auto, and restaurants for potential risks.

5. Notable Q&A Insights

• Deposit Costs: CFO Hope Dmuchowski indicated that deposit costs are expected to trend similarly to last year, with potential increases in Q3 and Q4 depending on interest rate movements.
• Loan Competition: CEO Bryan Jordan noted that the loan market remains competitive but expressed optimism about the strong pipelines and demand for lending.
• Wealth Management Growth: The bank's partnership with LPL has enhanced product penetration and client acquisition in wealth management, contributing to revenue growth.
• Hiring Strategy: The bank is focused on hiring relationship managers and investing in technology to enhance service delivery while maintaining expense discipline.

Overall, First Horizon reported strong financial results for Q2 2026, with a positive outlook for continued growth despite facing competitive pressures and economic uncertainties.