First Horizon Corp Q3 2025 Earnings Call Summary

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

Question: Jon Arfstrom - RBC Capital Markets Inc - Analyst : Hey, Bryan, maybe we'll just start the call with -- you talked a little bit about the activity picking up and some pipeline momentum. How optimistic are you on growth and is it really -- is it a noticeable change from a quarter ago?

Question: Jon Arfstrom - RBC Capital Markets Inc - Analyst : Okay, good. And then, Hope, one for you, just on the margin. It surprised us positively. It feels a little bit elevated. Is there a better starting point for the margin for the fourth quarter, given the Main Street impact and the mortgage company impact?

Question: Casey Haire - Autonomous Research - Analyst : Wanted to touch on the core, the deposit franchise on slide 8. I know there were some seasonal challenges this quarter, but just looking at the trends, the core deposit franchise is down almost 8% over the last two quarters. Just what is driving this and what is being done to kind of stabilize or reverse the trend and sort of the outlook?

Question: Casey Haire - Autonomous Research - Analyst : Okay, all right. I'm referring to like the DDA and the base rates, right? That's down 8% over the last two quarters, that's definitely below -- that's definitely lagging H8 and you guys are talking about keeping beta consistent with the prior cycle. That just seems kind of a challenge with the loan to deposit ratio at 97% and the core deposit franchise under pressure.

Question: Casey Haire - Autonomous Research - Analyst : Okay, all right, and just last one for me. Bryan, I wanted to touch on your M&A comment. So in terms of what you guys would be looking for in terms of size and geography, if a bank acquisition were to present itself in 2026.

Question: Ben Gerlinger - Citigroup - Analyst : I just wanted to kind of follow-up on my question regarding M&A. It seems like people have kind of implied that First Horizon would be a potential seller down the road given the one that has happened before, I guess you could say. But when you think about just the environment, it seems like bigger deals are more [involved] and more accepted by regulators. When you think about the opportunity in front of you and shareholder value, I mean, are you taking yourself off the table or is this more so just kind of positioning if something smaller did come up that you could potentially be a buyer so just kind of think about -- I mean, the share price is down quite a bit (technical difficulty)

Question: Ben Gerlinger - Citigroup - Analyst : Based on your closing remarks, when you talk about being a potential buyer yourself, it's taking your share price down a bit because it's not really what an implication that people thought might happen. Just hopefully, you can expand a little more.

Question: Ben Gerlinger - Citigroup - Analyst : Got you. That's helpful. And then just on a core basis, Hope. It seems like you said the Main Street lending program added roughly 7 bps. So I mean, when we think about a starting point for fourth quarter and into next year, kind of the high 3.40s, I feel like that's an appropriate level. But when you think kind of just the cadence and potential cuts in October and December, you talked about repricing and deposits. How do you think we should position the margin movement, especially with mortgage warehouse [being] a seasonal outflow over 4Q (inaudible)?

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Hope, you had a strong quarter on both NII and fees, but in your remarks, you maintained the revenue outlook of flat to up 4%. I know you noted that expenses may trend at the high end of the range. But given the strength you saw in revenue in 3Q, I'm wondering if you also expect revenue to trend closer to the high end of the range or if there's a level of conservatism in your outlook.

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Thank you. And then one on credit, maybe for Tom, if he's on the line. There were several questions on the large bank calls yesterday on their loan exposure to NDFIs given growth in that category over the past several quarters. I think your loan exposure to NDFIs is a little over 10% per the call report. Just given what's happened in the past several weeks, is this a loan category you're doing a deeper dive on now? Or anything more broadly on credit? Thank you.

Question: Timur Braziler - Wells Fargo Securities LLC - Analyst : Sticking to the M&A theme, it's been a couple of months now since the Pinnacle-Synovus announcement. I'm just wondering what you're seeing in terms of fallout from that transaction. Is that increasing competitive nature on loans, deposit, talent? Just maybe talk us through kind of the first couple of months post that deal.

Question: Timur Braziler - Wells Fargo Securities LLC - Analyst : Okay. And then, Bryan, your comment on potentially integrating a well-structured merger. I mean, that's a little bit more pointed than in the past in terms of First Horizon maybe looking to engage in M&A here in the next couple of years. I guess what does that mean for just the potential pool of buyers out there? I know recent quarters, the comment has always been that there's just not that many logical buyers kind of lined up. Is this further reinforcing that statement? And I guess, is that really the driver here? Is that there's lack of logical buyers and then therefore you got to just keep going and kind of consider all possible options on the capital front? I'm just wondering what changed in terms of making that more pointed comment on the M&A side.

Question: Andrew Leischner - Keefe Bruyette & Woods Inc - Analyst : This is Andrew Leischner on for Chris McGratty. Just going back to capital. As you make progress towards that updated 10.75% CET1 target, will buybacks continue to be more of a function of where loan growth lands in any given quarter? Or will we take greater appetite for those buybacks going forward? Thanks.

Question: Nicholas Holowko - UBS AG - Analyst : Maybe just one more on M&A. I know that you've flagged in the past, the PPNR opportunity, $100 million-plus over the next couple of years here with a chunk of that at least stemming from residual opportunity because of the IBERIA, First Horizon merger. Do you feel like you need to realize a significant portion of that $100 million-plus opportunity prior to engaging in any further M&A?

Question: Nicholas Holowko - UBS AG - Analyst : Understood, thank you. And then I guess looking out to '26 and the potential for flattish expenses there, ex any changes in the fixed income business, can you just touch on how you're thinking about balancing expense discipline versus investing, especially as you think about the possibility of being a much larger institution?

Question: Jon Arfstrom - RBC Capital Markets Inc - Analyst : I'm annoying here Bryan to talk about this. But I think you're saying you cannot run the company as if someone larger like TD is going to come in with a big premium in the near term. You have to keep looking ahead growing the franchise. If a small deal comes up, you consider it. If it enhances franchise value, a big premium comes in next week or a year from now, the Board would consider it. But if it doesn't happen, you can't just sit there and wait. I know it's annoying, but that's the message, right? Really, nothing's changed in terms of your approach?

Question: Anthony Elian - JPMorgan Chase & Co - Analyst : Hey, Bryan, one more on M&A. And I'm curious, you kind of emphasizing in-footprint, existing footprint. But if I think IBERIA and Capital Bank, they expanded your footprint to the Carolinas, Texas, Louisiana. So I'm curious, why put the emphasis on in-footprint this time around in your prepared remarks? Thank you.