First Horizon Corp at Goldman Sachs U.S. Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ryan Nash - Goldman Sachs Co - Analyst : So, Bryan, maybe to start off big picture, it feels like the focus in the industry was around the uncertainty, around rates and the election. And obviously, we've gotten a handful of Fed moves, the election behind us now. Do you feel we have the clarity on what '25 inevitably looks like? Obviously, I understand that you put out preliminary guidance. But what do you think your clients are looking for in terms of clarity, in terms of overall borrowing?

Question: Ryan Nash - Goldman Sachs Co - Analyst : You had a slide up there that laid out your footprint and all the growth that you're seeing. Obviously, these are some of the most attractive markets in the country and you're seeing a fair amount of competition coming in. Maybe just talk about how you're defending your market share or how are you actually growing it in this type of competitive environment.

Question: Ryan Nash - Goldman Sachs Co - Analyst : And then, you talked about targeting 15%-plus returns, and you mentioned potentially getting back there over a two- to three-year time frame. Can you just spend a little bit more time talking about some of the main levers to actually getting us there? Obviously, you talked about the capital. Maybe you can dig into some of the others that you think are going to be the key drivers to us achieving those goals.

Question: Ryan Nash - Goldman Sachs Co - Analyst : Hope, maybe let's dig into the outlook a little bit. First, maybe to just start off, you have outlined flat to up 4% on top-line revenue growth. Maybe just talk about what puts us at the lower end of the range versus the higher end. What are some of the expectations underlying that?

Question: Ryan Nash - Goldman Sachs Co - Analyst : And then, when you think about the drivers of revenue growth within that aspiring for the high end, how do you think about growth between NII and fees? Just given, as you articulated, the countercyclical businesses tend to do better in a rising -- in a falling interest rate environment. Obviously, the balance sheet is still positioned to be slightly asset-sensitive. Can you sort of triangulate for us how you're thinking about those underlying pieces and some of the main drivers?

Question: Ryan Nash - Goldman Sachs Co - Analyst : Got you. So, maybe to just kind of think about it -- we'll get into some discussion further on expenses. Maybe to just think about how the revenue and expenses work together, so I think at earnings, you talked about PPNR growth, right? And the top of the slide says PPNR growth expectations, so I'm assuming I know the answer before we get there. But are you still planning for PPNR growth as you look into '25 and what could derail that?

Question: Ryan Nash - Goldman Sachs Co - Analyst : Got you. And we'll come back to some of the other things that are laid out on the slides as we start to hit some of those topics. Maybe just talk a little bit about the declining rate cycle. You've had success bringing down deposit costs. I think you guys updated us at earnings. You gave another update at the conference last month. Maybe just talk about what you're seeing in terms of deposit pricing and deposit competition overall. And what are your expectations if we do end up getting a slower rate-cutting environment and we do see the return to loan growth?

Question: Ryan Nash - Goldman Sachs Co - Analyst : Got you. So, Hope, you touched on the fixed income business and some of the other countercyclical businesses. It sounds like there's obviously been a fair amount of volatility in that business. As you look out, do you see the business stabilizing at a certain level, just given what's embedded within the outlook? You sound somewhat optimistic into '25. And what do you foresee as the biggest factors that are impacting the business right now?

Question: Ryan Nash - Goldman Sachs Co - Analyst : And when you think about the countercyclical businesses, I know you have a slide in the deck that shows the profitability during different times. And obviously, 2020 and 2021 was an abnormal time. And I think we'd argue that '23 is an abnormal time. But how do you think about normalized profitability in these countercyclical businesses? Is 2019 the best indication and -- or what would you point to?

Question: Ryan Nash - Goldman Sachs Co - Analyst : So, the outlook calls for credit -- I mean, credit losses have been performing better than expected. At least, they certainly did in the third quarter. And I think the outlook calls for, at least on the low end, decent improvement, and even on the high end, continued very strong performance. Maybe just talk broadly about what you're seeing on credit and what gives you the confidence that we could see such good performance.

Question: Ryan Nash - Goldman Sachs Co - Analyst : I was actually going to ask you if the allowance was going to be coming down, but it sounds like you beat me to it. Before we move on to a couple of other topics, we're two months into the quarter. We talked a little bit broadly about -- deposit repricing has been very, very successful. Any just updates in terms of broad expectations for the fourth quarter on what you're seeing and anything to highlight in terms of business performance?

Question: Ryan Nash - Goldman Sachs Co - Analyst : Got you. Maybe to shift gears and talk a little bit about capital, you've been targeting this kind of 11%. You've been running a little bit above it in recent quarters. Slide shows a near-term target of 11%, but you're also saying 10.5% to 11%. So obviously, the question of, what is it in the environment you're waiting to see, Bryan, to determine whether or not we're going to be at 11% or we could bring it down to 10.5%, or somewhere in between? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 8:40PM, FHN.N - First Horizon Corp at Goldman Sachs U.S. Financial Services Conference

Question: Ryan Nash - Goldman Sachs Co - Analyst : And when you said 7.5 million shares, I got nervous. Luckily, I remembered that the stock's right around $20, so I was able to do some quick math in the head -- in my head, but you were kind enough to do that for us. I guess, given the fact that you still think the stock is a good value, even as it's gone up, how do you think about use of the full $1 billion and how do you think about toggling it between holding onto capital for loan growth versus buying back shares?

Question: Ryan Nash - Goldman Sachs Co - Analyst : A couple of last topics in the last five minutes or so that I wanted to dig into, so you laid out guidance of 2% to 4% expense growth. I know the bank has been investing in a handful of different initiatives, things like GL, treasury management, some that have been more backroom-oriented than a lot of revenue-producing initiatives. Can you maybe just talk about, as you think about the expense growth that you're putting out for next year, how do you think about what is more kind of maintenance-oriented, run the bank, versus where are you investing in frontline producing to drive top-line growth?

Question: Ryan Nash - Goldman Sachs Co - Analyst : One thing I know we've talked a lot about in terms of investing and this just becoming a $100 billion bank -- you'll get there at some point in time. Maybe just talk about how far along you are. And obviously, there's a lot of talk about -- I don't know if you want to call it deregulation or no finalization of regulation, but things like TLAC have been things you've spoken a lot about, Bryan. How does -- where are we in this and what are your expectations for some of these rules? And how does that impact your view of crossing that threshold?

Question: Ryan Nash - Goldman Sachs Co - Analyst : I had two more questions I wanted to get through in the last two or three minutes here. So, Bryan, you have accepted TD's offer for a nice premium back in 2022. But obviously, they couldn't get regulatory approval. The market seems to be somewhat more upbeat on M&A into next year. Has the outcome of the election changed your views at all on M&A? If you were to consider, would you do within footprint? Would you ever consider expanding outside the footprint? What's sort of your latest views on that?

Question: Ryan Nash - Goldman Sachs Co - Analyst : Well, Hope, we never got around to the reconciliation. But please, join me in thanking Bryan and Hope for the presentation.