UPDATE: This article includes comments from the company's earnings call.
First Horizon slightly beat analysts' expectations in the first quarter as it made more progress in its fight to control deposit costs, and as major investments started paying off.
The Memphis, Tennessee-based bank also maintained its earnings guidance for 2025, despite increasing uncertainty in the macroeconomic environment. Chief Financial Officer Hope
"We do believe that our countercyclicals will offset any type of economic condition that we can see at this time," she said on First Horizon's first-quarter earnings call. "There's always the unexpected opportunity that could come up that would push us off this guidance. We don't see it."
Despite the chaos on Wall Street this month due to uncertainty around President Donald Trump's
First Horizon is forecasting 2025 revenue ranging from flat to up 4%. However, the bank noted Wednesday that its "revenue composition" will be driven by the pace of interest rate cuts and macroeconomic variables. In January, the bank said it anticipated three interest rate cuts this year, but Dmuchowski said First Horizon's asset-sensitive balance sheet benefited in the first quarter from the absence of a rate cut.
More aggressive cuts by the Federal Reserve would be negative for the bank's net interest income outlook. But First Horizon could make up those earnings in its mortgage and mortgage warehousing businesses, along with other fee income-based businesses, Dmuchowski said. However, expenses from commissioned businesses would also drift higher, she said.
First Horizon President and CEO Bryan Jordan said on the earnings call that the $81.5 billion-asset company is equipped to "manage uncertainties and adapt to economic changes." He added that the recent turbulence has put a pause on borrowers' appetite for loans, but the bank's pipelines are still strong for when the dust settles.
"The uncertainty has led to, not a pessimism in our borrower base, but simply, 'Let's wait and see,'" Jordan said. "'Let's take a minute and understand how all of this is going to play out, what it's going to cost, what are the variable components?' But there is still an inherent optimism."
Chief Credit Officer Thomas Hung said tariffs would especially impact lending in the retail trade, consumer finance, manufacturing and construction sectors, but that no single industry makes up more than 12% of First Horizon's commercial and industrial loan book.
First Horizon stuck to its previous forecast of low-single-digit percentage loan growth in 2025.
The current economic situation isn't as grave as it was during the pandemic, but there may be similarities, Jordan said.
"If anything, we're going to have to deal with the impact of a supply shock," he said. "So there are some echoes of it, but at this point, nowhere near the severity of what we were all trying to deal with in March of 2020."
In the first quarter, First Horizon reeled in $218 million of net income, up 14% from a year ago and ahead of analysts' estimates. Earnings per share were 41 cents, compared with analysts' estimates of 40 cents. The company's stock was trading relatively flat Wednesday.
Net charge-off ratio expectations, of between 0.15% and 0.25%, remained unchanged. In the first quarter, the bank reported a net charge-off ratio of 0.19%, a year-over-year decrease of eight basis points. The bank did increase its reserves by $11 million — "given the uncertainty," Jordan explained.
First Horizon bought back $360 million of shares as part of a $1 billion repurchase plan approved in October. The bank is targeting a common equity Tier 1 ratio of between 10.5% and 11% in 2025 as it returns excess capital to shareholders and budgets for some modest loan growth.
Loans in the first quarter of $61.6 billion marked a 1% climb from the year prior, as lending to mortgage companies fell seasonally and commercial real estate balances declined due to paydowns. The return First Horizon earns on its loans has come down following the Fed's rate cuts last year.
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First Horizon has also been
First Horizon was able to keep a lid on expenses, as the completion of certain technology projects has helped cut down on costs. The bank had to balance its expenses
"We did not come into the year with a bare-bones budget," Jordan said Wednesday. "We recognized that we needed to continue to invest in building the franchise, and there were some things that were residual following the termination of the merger agreement."
He added that there are "levers" that can be pulled, depending on the economic environment, to continue investments.
More than a year ago, First Horizon launched a three-year, $100 million investment in its technology, starting with an infrastructure upgrade. The
Now that some of the internal projects are completed — about halfway into the initiative — the bank hopes to add more customer-facing innovation to its docket, like improving its mobile and online banking capabilities.
