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 M. Nash - Goldman Sachs Group Inc - Analyst : So Bryan, 2025 was a solid year for the bank. You made progress on your return targets, returned a lot of capital, held costs tight, at certain pockets very strong revenue growth. As you reflect back on the past year, what went well? What are the areas for improvement? And how does this position the bank going forward in 2026?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : And (inaudible) we will get to how that fourth is progressing at some point in the next 31 minutes. But Bryan, I know that you're out in the market often talking to clients. You listen to the sentiment at the conference, it's clear that people are feeling pretty upbeat. Maybe just talk about how recent macro developments have shaped your outlook for clients and the bank's momentum, what shifts are you seeing in client sentiment and how are you feeling about how pipelines are looking?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : And I know that we'll get formal guidance when we get into 2026, but I think we've talked about loan growth turn into more normal levels next year, maybe mid-single digit or so growth. Maybe just talk about the areas you're expecting to pick up. You talked about C&I. I know that CRE we're getting closer to inflection. Maybe just talk about areas you expect for us and what gives you confidence that we should see a return to that.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : That sounds great. So across your footprint, there's both lots of competition, but there's also lots of disruption. Maybe just talk about how you think this is impacting both your competitive position and your ability to attract and retain clients.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Yeah, that makes total sense. Let's spend a minute talking about deposits. So deposit balances have been flattish or so over the past year or two. But obviously, there's a lot of underlying pieces. As you think about the funding model for your growth objectives, what are your expectations for both deposit growth, deposit betas into '26? Hope, feel free to get in, in this. And do you expect to resume growing deposits as we fund loan growth next year?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : So I just wanted to spend a minute maybe talking about some of the specialty lending businesses, right? We obviously talked about traditional C&I, loans to mortgage company obviously would be one of these. Maybe just talk about some of the key businesses. How does this business mix between regional banking and your countercyclical businesses deliver stability and performance across varied cycles? And where are you expecting the most attractive opportunities for 2026?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : So I wasn't going to ask you yet, but since we've mentioned the fourth quarter several times, given that we are two months into the quarter, you talked about good deposit performance, you talked about good performance in some of the countercyclicals, anything to update in terms of expectations? Bryan mentioned loan-to-deposit growth, but loan growth, deposit costs. Anything else that's relevant to share at this point in time in terms of 4Q?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Maybe just to put a finer point on the countercyclical businesses into 2026. So I think about combining a couple of things you said, right? Mortgage activity should be up next year that helps both the origination and loans to mortgage companies, interest rates coming down, shape of the curve should be good for fixed income business. Just maybe help us understand how you think about how these things could contribute to revenue growth for next year. And anything likely to stand out for you in terms of relationship deepening for fee income growth in terms of the countercyclical businesses?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : I think I've asked this question to Hope five different times, but I guess I'll ask it again in the public forum. So you mentioned flattish expenses, obviously impressive just given all the investments that need to be made in the business. But Hope, maybe just talk about how do you hold expenses flat while investing in talent, new branches, technology, things like AI? And are there any areas of particular where you're getting efficiency opportunities into '26 and beyond?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Maybe let's talk about the ish that you highlighted. I know that commission businesses were, I don't want to say not include it, but I'm sure there was a certain level of activity. Just help us understand just what was baked in for the commission businesses, the countercyclical businesses, which I know I've noted are not part of your flattish expenses.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Got you. Okay. No, that's super helpful. So I think it was two years ago at this conference, you told me that you expected mid-teens returns in the next 24 months. You got to mid-teens faster than that, so congrats. You updated your target to 15% plus. We have ish, we've got plus, we have a lot of different things going on. And now you hit 15% last quarter. Now what is the path to achieving the sustained 15% ROTCE as you highlighted? And what are the main drivers to getting the -- obviously, capital, credit, PPNR? Maybe help us think about how you get that on a sustained basis and the key drivers.

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : So you talked about the $100 million plus PPNR opportunity. Maybe just talk about how those are progressing. And how does that factor into the type of revenue growth you're talking about next year, and where are you seeing the best opportunities there?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Maybe as a follow-up to the buyback question, so $300 million quarter-to-date, that means you have around $900 million-ish still on your authorization. And I guess in a world of improving of improving loan growth, how do you think about utilization of the remaining authorization given the toggle between loan growth using that for -- to buy back shares?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : I guess the other piece that you could have factored into that is that you've been in an environment where you've been bringing down capital ratios, right? So your allocation probably would have kept it consistent. But if I think about it, you have near-term target of 10.75% and, I guess, long-term goal of 10% to 10.5%. How do you think about balancing all of these things, like you obviously talked about the third, and the third , but also then bringing capital down and what would drive you towards the lower end of that capital target?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Guessing you're not going to be surprised by this next question, Bryan, but I think the big story at 3Q earnings, at least from the market's perspective, was your commentary on M&A, where you said in '26 or beyond that you're increasingly confident in your ability to integrate a well-structured merger. While you noted that this wasn't a change in message, obviously, the shares were sent down in a meaningful fashion. Now that a few months have passed, what conditions would drive you to pursue a filling or a tuck-in acquisition in your footprint? Is there increased flexibility or urgency versus prior years to look at doing something like this?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Sure. No, that makes total sense. I guess, obviously, a couple of years ago, you guys made the decision to pursue a transaction with TD. And obviously, we all know how that ended. But maybe just talk about given the changing environment and changing regulatory environment, how do you evaluate the optionality between remaining independent, considering strategic combinations or even pursuing expansion via mergers or branch deals just given the regulatory climate that we're seeing right now?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Got you. Super helpful. We really haven't spent any time with you talking about credit. Obviously, credit has been a big bright spot for FHN this year, loss is tracking towards the low end of your '15 to '25 guide. Maybe just talk a little bit about anything that you're closely monitoring the credit book or client portfolios in '26? And anything in particular that you're spending more time thinking about in terms of areas of charge-off or provision over time?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : So we're getting towards the end here. We covered a lot of ground, particularly how you're thinking about the next year, capital allocation, strategic activity, PPNR uplift. So a lot in there. And I guess the answer could kind of speak for itself, Bryan. But when you think about First Horizon, talk maybe about what you think distinguishes the story into next year. What do you think is still misunderstood? And what do you see as the biggest opportunity as we turn the calendar in the next 22 or so days?

Question: Ryan M. Nash - Goldman Sachs Group Inc - Analyst : Awesome. Well, we are out of time. So please join me in thanking Bryan and Hope.