First Horizon Corp Q3 2024 Earnings Call Transcript

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

Question: Ebrahim Poonawala - Bank of America Securities - Analyst : Hey, good morning, I guess. Maybe, Brian, Hope. But so -- it makes sense in terms of talking about total revenues versus NII fees, given the cyclicality of your businesses. But just talk to us, I guess the question is at least in the very near term NII, I think, I hope you mentioned so much in compression over the next quarter or two will impact NII? When we look at the fixed income business, the $47 million in fees this quarter, is it as good as it gets in terms of the upper bound on this or what's like, we've seen a fair amount of bond book restructuring that banks rates got cut or is there another leg higher to go on additional rate outlook certainly? We would love for you to address that.

Question: Ebrahim Poonawala - Bank of America Securities - Analyst : Understood. And just the other question was around the loan to deposit ratio. I think you call out the decline from 97% to 94% partly driven by the some of the actions you took during the quarter. I know we've talked about this in the past. Just remind us when you look at the 94% loan to deposit ratio, is there a certain level to which you're managing to? And as a result is that kind of making a little bit more cautious in terms of how quickly you flex deposit pricing lower? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 1:30PM, FHN.N - Q3 2024 First Horizon Corp Earnings Call

Question: Michael Rose - Raymond James Financial, Inc - Analyst : Hey, good morning, everyone. Thanks for taking my questions. Hope, I just wanted to dig into your comments on the margin a little bit. Certainly understand a little bit more pressure in the fourth quarter just given the mismatch of timing that you referenced. But as we think about the margin into next year with some of the tailwinds, as you mentioned, on the deposit side, some additional repricing opportunity, I think, the slides mentioned a chunk of deposits that was eligible for repricing $18 billion of promotional clients deposits that are eligible for pricing in the fourth quarter. Are we at a point where the fourth quarter do you think is the inflection point for the NIM? And we can move higher despite your rate sensitivity or is the expectation that it's going to be a push and pull each quarter? And we shouldn't expect the margin to really move at least over the next couple quarters? Thanks.

Question: Michael Rose - Raymond James Financial, Inc - Analyst : Certainly understand that. Maybe just as a follow up. And I know the rate backdrop is difficult to project and I know it's early for next year, but is the plan or the expectation that you can grow kind of adjusted PPMR year-over-year? And, are you planning at this point for positive operating leverage? And I asked that because I certainly understand you pulled some leverage on the cost savings front, but we're hearing more and more banks looking to hire bankers assume that would be some of your expectations to drive some balance sheet growth. But just wanted to just initially, if you had any comments on how we should, kind of think about that. Thanks.

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Hey, thanks, good morning, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 1:30PM, FHN.N - Q3 2024 First Horizon Corp Earnings Call

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Bryan, one for you. Give us your thoughts on loan growth expectations. Looks like you guys referenced some CRE stability but C&I was a little bit weaker but talk about what you're seeing, you know how much of this is self-imposed and what kind of an outlook you have for growth?

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Okay, but fair enough on that. So maybe a little more optimism potentially. I know that's a lot of hedging there, but it feels like you're still somewhat optimistic on growth?

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Hope, follow up on fixed income. Are you willing to share what the ADRs look like in August and September? How big of a step up that was? I think that would help us with maybe a run rate?

Question: Jared Shaw - Barclays Capital, Inc. - Analyst : Hey, good morning, everybody. Maybe just going back on the deposit side, the $18 billion that you referenced, that's coming due in fourth quarter. Could you give us an update on the pricing of those deposits down and where you expect to see that moving to? And also is there a term change in that promotion?

Question: Jared Shaw - Barclays Capital, Inc. - Analyst : And then as we look at the deposit composition, what's the appetite for additional brokered from here? I heard your commentary that you built that up in anticipation of the mortgage business. Should we expect to see brokered be a bigger part of the overall deposit mix or are we near the top?

Question: Jared Shaw - Barclays Capital, Inc. - Analyst : Okay, thanks. And then just finally, for me, I know you're guiding more towards total revenue versus NII versus fees. But, with the expectation, how should we think about the dynamic between continued margin pressure but potentially some balance sheet growth? You know, we are we at a trough for NII here or trying to gauge or what the -- how we're ending the year? What the exit of NII is for '24?

Question: Samuel Varga - UBS Securities LLC - Analyst : Hey, good morning. I just wanted to switch over to deposit a little bit. I wanted to see if you could give some color on any -- you should give, you might have going on to attract some non interest deposits whether it's through retail or, commercial?

Question: Samuel Varga - UBS Securities LLC - Analyst : Understood. And then Hope, the 12% of loans that are ARMs. Can you give us a sense for what sort of weighted average yield that part of the book currently has? And I understand that over the next year, there's not much of a reset on any of those, but I guess as you think about late '25 and '26 are there sort of bigger chunks that we should be aware of this main model NII? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 1:30PM, FHN.N - Q3 2024 First Horizon Corp Earnings Call

Question: Christopher McGratty - Keefe, Bruyette & Woods, Inc. - Analyst : Good morning. Hope, maybe a question or Bryan on the PPNR '25 being above '24. Just I guess a couple questions, maybe a comment between. Is that more of a revenue comment or an expense control, given your steps and secondarily does that currently factor in the forward curve right now? Thanks.

Question: Christopher McGratty - Keefe, Bruyette & Woods, Inc. - Analyst : And then maybe on regulation, your target of 11% on CET1. You're slightly above it. I would expect, you're saying you're going to continue with the buyback, but just any changes, over the medium term that you might be contemplating now that -- will been a little bit watered down and also maybe a comment Bryan about where you are on the investment for $100 billion?

Question: Timur Braziler - Wells Fargo & Company - Analyst : Hi, good morning. Maybe one for Hope, just following up on some of your comments relating to mortgage outlook for next year, I guess what's the rate environment need to look like for a mortgage to get back to some of the type of performance that maybe you were implying on the upside?

Question: Timur Braziler - Wells Fargo & Company - Analyst : Okay. And then maybe just on the revenue guide, it implies a pretty wide range of outcomes in the fourth quarter. I'm just wondering where the greater variability is. Is it on the NII side? Is it on the fee side? And then maybe more specifically on fees, you called out some of the other fees this quarter as being one time in nature. Can you maybe give us a starting run rate for 4Q kind of X one of the, some of those one-time fees?

Question: Timur Braziler - Wells Fargo & Company - Analyst : Okay. And then just the one timers, this quarter for fees is that the full increase in the other line?

Question: Timur Braziler - Wells Fargo & Company - Analyst : Great. And if I can sneak one more question in. So the comment on commercial real estate that the funding schedule has kind of stabilized out. I'm just wondering as we do get rate cuts as pay down start to accelerate. Is there any way you can quantify maybe what historical paydowns have looked like what they looked like more recently? And what type of headwind that might be that broader loan growth?

Question: Timur Braziler - Wells Fargo & Company - Analyst : -- No, pay down on commercial real estate.

Question: Christopher Marinac - Janney Montgomery Scott LLC - Analyst : Thanks. Good morning. I had a follow up credit question as it relates to the Shared National Credit exam this year. Is there anything that could fall out on that in terms of either, you know, inflows of NPLs or more importantly, charge offs as we move into Q4 and Q1?

Question: Christopher Marinac - Janney Montgomery Scott LLC - Analyst : Great. Thank you for that and then Hope just a quick one for you. I know you broke out a lot of information on the other expense numbers this morning. Is there anything in there for operational losses or customer fraud, things of that nature that would stand out?