First Horizon Corp. Files Q3 2024 10-Q

Ticker: FHN-PH · Form: 10-Q · Filed: Nov 7, 2024 · CIK: 36966

Sentiment: neutral

Topics: 10-Q, financials, quarterly-report

Related Tickers: FHORN

TL;DR

FHORN Q3 2024 10-Q filed. Financials look solid.

AI Summary

First Horizon Corp. reported its Q3 2024 results, ending September 30, 2024. The filing details the company's financial position and operations for the period. Key financial data and disclosures are provided as required by SEC regulations.

Why It Matters

This 10-Q filing provides investors and analysts with a detailed look at First Horizon Corp.'s financial performance and condition as of the end of the third quarter of 2024.

Risk Assessment

Risk Level: low — This is a standard quarterly financial filing with no immediate red flags.

Key Players & Entities

FAQ

What is the reporting period for this 10-Q filing?

The Conformed Period of Report is 20240930, meaning the filing covers the period ending September 30, 2024.

When was this 10-Q filed with the SEC?

This 10-Q was filed on 20241107.

What is the company's primary business as indicated by its SIC code?

The Standard Industrial Classification (SIC) code is 6021, which corresponds to National Commercial Banks.

What is the company's principal executive office address?

The business address is 165 MADISON AVENUE, MEMPHIS, TN 38103.

Has the company undergone any name changes in the past?

Yes, the company was formerly known as FIRST HORIZON NATIONAL CORP (name change date: 20040422) and FIRST TENNESSEE NATIONAL CORP (name change date: 19920703).

Filing Stats: 4,907 words · 20 min read · ~16 pages · Grade level 20 · Accepted 2024-11-07 16:39:44

Key Financial Figures

Filing Documents

Forward-Looking Statements

Forward-Looking Statements 3 Non-GAAP Information 4

Financial Information

Part I. Financial Information 5

Financial Statements

Item 1. Financial Statements 5

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 73

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 111

Controls and Procedures

Item 4. Controls and Procedures 111

Other Information

Part II. Other Information 112

Legal Proceedings

Item 1. Legal Proceedings 112

Risk Factors

Item 1A. Risk Factors 112

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 112

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 112

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 112

Other Information

Item 5. Other Information 112

Exhibits

Item 6. Exhibits 113

Signatures

Signatures 115 GLOSSARY OF ACRONYMS & TERMS Table of Contents Glossary of Acronyms and Terms The following is a list of common acronyms and terms used throughout this report: ACL Allowance for credit losses AFS Available for sale AIR Accrued interest receivable ALCO Asset/Liability Committee ALLL Allowance for loan and lease losses ALM Asset/liability management AOCI Accumulated other comprehensive income ASC FASB Accounting Standards Codification Associate Person employed by FHN ASU Accounting Standards Update Bank First Horizon Bank BOLI Bank-owned life insurance C&I Commercial, financial, and industrial loan portfolio CECL Current expected credit loss CEO Chief Executive Officer CMO Collateralized mortgage obligations CODM Chief Operating Decision-Maker Company First Horizon Corporation Corporation First Horizon Corporation CRE Commercial Real Estate CRMC Credit Risk Management Committee DTA Deferred tax asset DTL Deferred tax liability EAD Exposure as default EPS Earnings per share Fannie Mae Federal National Mortgage Association FASB Financial Accounting Standards Board FDIC Federal Deposit Insurance Corporation Federal Reserve Federal Reserve Board Fed Federal Reserve Board FHA Federal Housing Administration FHLB Federal Home Loan Bank FHN First Horizon Corporation FHNF FHN Financial; FHN's fixed income division FICO Fair Isaac Corporation First Horizon First Horizon Corporation FRB Federal Reserve Bank or the Federal Reserve Board Freddie Mac Federal Home Loan Mortgage Corporation FTE Fully taxable equivalent GAAP Generally accepted accounting principles (U.S.) GHG Greenhouse Gas GNMA Government National Mortgage Association or Ginnie Mae GSE Government sponsored enterprises, in this report references Fannie Mae and Freddie Mac HELOC Home equity line of credit HFS Held for Sale HTC Historic tax credit HTM Held to maturity IBKC IBERIABANK Corporation IBKC merger FHN's merger of equals with IB

FORWARD-LOOKING STATEMENTS AND NON-GAAP INFORMATION

FORWARD-LOOKING STATEMENTS AND NON-GAAP INFORMATION Table of Contents

Forward-Looking Statements

Forward-Looking Statements This report, including materials incorporated into it, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to FHN's beliefs, plans, goals, expectations, and estimates. Forward-looking statements are not a representation of historical information, but instead pertain to future operations, strategies, financial results or other developments. The words "believe," "expect," "anticipate," "intend," "estimate," "should," "is likely," "will," "going forward," and other expressions that indicate future events and trends identify forward-looking statements. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, operational, economic, and competitive uncertainties and contingencies, many of which are beyond our control, and many of which, with respect to future business decisions and actions (including acquisitions and divestitures), are subject to change and could cause our actual future results and outcomes to differ materially from those contemplated by forward-looking statements or historical performance. Examples of uncertainties and contingencies include, among other important factors: global, general and local economic and business conditions, including economic recession or depression; the stability or volatility of values and activity in the residential housing and commercial real estate markets; expectations of and actual timing and amount of interest rate movements, including the slope and shape of the yield curve, which can have a significant impact on a financial services institution; market and monetary fluctuations, including fluctuations in mortgage markets; the financial condition of borrowers and other counterparties; competition within and outside the fi

FORWARD-LOOKING STATEMENTS AND NON-GAAP INFORMATION

FORWARD-LOOKING STATEMENTS AND NON-GAAP INFORMATION Table of Contents Non-GAAP Information Certain measures included in this report are "non-GAAP," meaning they are not presented in accordance with U.S. GAAP and also are not codified in U.S. banking regulations currently applicable to FHN. Although other entities may use calculation methods that differ from those used by FHN for non-GAAP measures, FHN's management believes such measures are relevant to understanding the financial condition, capital position, and financial results of FHN and its business segments. Non-GAAP measures are reported to FHN's management and Board of Directors through various internal reports. The non-GAAP measures presented in this report are: pre-provision net revenue, return on average tangible common equity, tangible common equity to tangible assets, adjusted tangible common equity to risk-weighted assets, and tangible book value per common share. Table I.2.26 appe aring in the MD&A (Item 2 of Part I) of this report provides a reconciliation of non-GAAP items presented in this report to the most comparable GAAP presentation. Presentation of regulatory measures, even those which are not GAAP, provide a meaningful base for comparability to other financial institutions subject to the same regulations as FHN, as demonstrated by their use by banking regulators in reviewing capital adequacy of financial institutions. Although not GAAP terms, these regulatory measures are not considered "non-GAAP" under U.S. financial reporting rules as long as their presentation conforms to regulatory standards. Regulatory measures used in this report include : common equity tier 1 capital, generally defined as common equity less goodwill, other intangibles, and certain other required regulatory deductions; tier 1 capital, generally defined as the sum of core capital (including common equity and instruments that cannot be redeemed at the option of the holder) adjusted for certain items under risk bas

, ITEM 1. FINANCIAL STATEMENTS

PART I, ITEM 1. FINANCIAL STATEMENTS Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheets (unaudited) 6 Consolidated Statements of Income (unaudited) 7 Consolidated Statements of Comprehensive Income (Loss) (unaudited) 9 Consolidated Statements of Changes in Equity (unaudited) 10 Consolidated Statements of Cash Flows (unaudited) 12 Notes to the Consolidated Financial Statements (unaudited) 13 Note 1 Basis of Presentation and Accounting Policies 13 Note 2 Investment Securities 16 Note 3 Loans and Leases 19 Note 4 Allowance for Credit Losses 28 Note 5 Mortgage Banking Activity 31 Note 6 Goodwill and Other Intangible Assets 32 Note 7 Preferred Stock 33 Note 8 Components of Other Comprehensive Income (Loss) 34 Note 9 Earnings Per Share 36 Note 10 Contingencies and Other Disclosures 37 Note 11 Retirement Plans 39 Note 12 Business Segment Information 40 Note 13 Variable Interest Entities 45 Note 14 Derivatives 48 Note 15 Master Netting and Similar Agreements - Repurchase, Reverse Repurchase, and Securities Borrowing Transactions 55 Note 16 Fair Value of Assets and Liabilities 57 5 3Q24 FORM 10-Q REPORT

, ITEM 1. FINANCIAL STATEMENTS

PART I, ITEM 1. FINANCIAL STATEMENTS Table of Contents CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December 31, (Dollars in millions, except per share amounts) 2024 2023 Assets Cash and due from banks $ 1,028 $ 1,012 Interest-bearing deposits with banks 1,286 1,328 Federal funds sold and securities purchased under agreements to resell 1,008 719 Trading securities 1,549 1,412 Securities available for sale at fair value 8,248 8,391 Securities held to maturity (fair value of $ 1,144 and $ 1,161 , respectively) 1,282 1,323 Loans held for sale (including $ 87 and $ 68 at fair value, respectively) 494 502 Loans and leases 62,445 61,292 Allowance for loan and lease losses ( 823 ) ( 773 ) Net loans and leases 61,622 60,519 Premises and equipment 572 590 Goodwill 1,510 1,510 Other intangible assets 154 186 Other assets 3,882 4,169 Total assets $ 82,635 $ 81,661 Liabilities Noninterest-bearing deposits $ 16,212 $ 17,204 Interest-bearing deposits 50,363 48,576 Total deposits 66,575 65,780 Trading liabilities 767 509 Short-term borrowings 2,585 2,549 Term borrowings 1,202 1,150 Other liabilities 2,190 2,382 Total liabilities 73,319 72,370 Equity Preferred stock, Non-cumulative perpetual, no par value; authorized 5,000,000 shares; issued 16,750 and 26,750 shares, respectively 426 520 Common stock, $ 0.625 par value; authorized 700,000,000 shares; issued 532,180,686 and 558,838,694 shares, respectively 333 349 Capital surplus 4,947 5,351 Retained earnings 4,304 3,964 Accumulated other comprehensive loss, net ( 989 ) ( 1,188 ) FHN shareholders' equity 9,021 8,996 Noncontrolling interest 295 295 Total equity 9,316 9,291 Total liabilities and equity $ 82,635 $ 81,661 See accompanying notes to consolidated financial statements. 6 3Q24 FORM 10-Q REPORT

, ITEM 1. FINANCIAL STATEMENTS

PART I, ITEM 1. FINANCIAL STATEMENTS Table of Contents CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions, except per share data; shares in thousands) (Unaudited) 2024 2023 2024 2023 Interest income Interest and fees on loans and leases $ 996 $ 941 $ 2,923 $ 2,624 Interest and fees on loans held for sale 10 15 27 40 Interest on investment securities 60 62 179 186 Interest on trading securities 22 19 64 57 Interest on other earning assets 31 43 91 107 Total interest income 1,119 1,080 3,284 3,014 Interest expense Interest on deposits 434 409 1,231 845 Interest on trading liabilities 6 3 18 8 Interest on short-term borrowings 35 46 104 182 Interest on term borrowings 17 17 50 56 Total interest expense 492 475 1,403 1,091 Net interest income 627 605 1,881 1,923 Provision for credit losses 35 110 140 210 Net interest income after provision for credit losses 592 495 1,741 1,713 Noninterest income Fixed income 47 28 138 97 Deposit transactions and cash management 45 46 134 133 Brokerage, management fees and commissions 27 21 76 66 Card and digital banking fees 19 20 58 61 Other service charges and fees 13 14 40 41 Trust services and investment management 12 12 36 35 Mortgage banking income 9 7 28 18 Gain on merger termination — — — 225 Securities gains (losses), net 1 — 2 1 Other income 27 25 69 68 Total noninterest income 200 173 581 745 Noninterest expense Personnel expense 282 266 862 821 Net occupancy expense 33 30 95 92 Computer software 30 26 89 82 Operations services 25 21 69 65 Legal and professional fees 15 13 47 33 Advertising and public relations 14 16 37 47 Contract employment and outsourcing 12 12 40 36 Deposit insurance expense 11 14 51 40 Amortization of intangible assets 11 12 33 36 Equipment expense 10 11 32 32 Communications and delivery 8 8 24 27 Contributions 4 3 6 60 Other expense 56 42 142 137 Total noninterest expense 511 474 1,527

, ITEM 1. FINANCIAL STATEMENTS

PART I, ITEM 1. FINANCIAL STATEMENTS Table of Contents CONSOLIDATED STATEMENTS OF INCOME (continued) Basic earnings per common share $ 0.40 $ 0.23 $ 1.07 $ 1.26 Diluted earnings per common share $ 0.40 $ 0.23 $ 1.06 $ 1.23 Weighted average common shares 534,222 558,559 544,356 544,952 Diluted average common shares 537,971 561,421 547,629 561,930 See accompanying notes to consolidated financial statements. 8 3Q24 FORM 10-Q REPORT

, ITEM 1. FINANCIAL STATEMENTS

PART I, ITEM 1. FINANCIAL STATEMENTS Table of Contents CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Three Months Ended September 30, Nine Months Ended September 30, (Dollars in millions) (Unaudited) 2024 2023 2024 2023 Net income $ 223 $ 142 $ 624 $ 727 Other comprehensive income (loss), net of tax: Net unrealized gains (losses) on securities available for sale 232 ( 206 ) 167 ( 197 ) Net unrealized gains (losses) on cash flow hedges 58 ( 20 ) 26 ( 22 ) Net unrealized gains (losses) on pension and other postretirement plans 2 3 6 5 Other comprehensive income (loss) 292 ( 223 ) 199 ( 214 ) Comprehensive income (loss) 515 ( 81 ) 823 513 Comprehensive income attributable to noncontrolling interest 5 5 15 14 Comprehensive income (loss) attributable to controlling interest $ 510 $ ( 86 ) $ 808 $ 499 Income tax expense (benefit) of items included in other comprehensive income: Net unrealized gains (losses) on securities available for sale $ 75 $ ( 67 ) $ 53 $ ( 65 ) Net unrealized gains (losses) on cash flow hedges 19 ( 6 ) 9 ( 7 ) Net unrealized gains (losses) on pension and other postretirement plans 1 1 2 2 See accompanying notes to consolidated financial statements. 9 3Q24 FORM 10-Q REPORT

, ITEM 1. FINANCIAL STATEMENTS

PART I, ITEM 1. FINANCIAL STATEMENTS Table of Contents CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Nine Months Ended September 30, 2024 Preferred Stock Common Stock (Dollars in millions, except per share data; shares in thousands) (unaudited) Shares Amount Shares Amount Capital Surplus Retained Earnings Accumulated Other Comprehensive Income (Loss) (a) Noncontrolling Interest Total Balance, December 31, 2023 26,750 $ 520 558,839 $ 349 $ 5,351 $ 3,964 $ ( 1,188 ) $ 295 $ 9,291 Adjustment to reflect adoption of ASU 2023-02 — — — — — 8 — — 8 Net income — — — — — 192 — 5 197 Other comprehensive income (loss) — — — — — — ( 83 ) — ( 83 ) Cash dividends declared: Preferred stock — — — — — ( 8 ) — — ( 8 ) Common stock ($ 0.15 per share) — — — — — ( 84 ) — — ( 84 ) Common stock repurchased (b) — — ( 11,052 ) ( 7 ) ( 152 ) — — — ( 159 ) Excise tax on common stock repurchased — — — — ( 2 ) — — — ( 2 ) Common stock issued for: Stock options exercised and restricted stock awards — — 850 — — — — — — Stock-based compensation expense — — — 1 17 — — — 18 Dividends declared - noncontrolling interest of subsidiary preferred stock — — — — — — — ( 5 ) ( 5 ) Balance, March 31, 2024 26,750 520 548,637 343 5,214 4,072 ( 1,271 ) 295 9,173 Net income — — — — — 199 — 5 204 Other comprehensive income (loss) — — — — — — ( 10 ) — ( 10 ) Cash dividends declared: Preferred stock — — — — — ( 8 ) — — ( 8 ) Common stock ($ 0.15 per share) — — — — — ( 84 ) — — ( 84 ) Series D preferred stock redemption ( 10,000 ) ( 94 ) — — — ( 6 ) — — ( 100 ) Excise tax on preferred stock redemption — — — — — ( 1 ) — — ( 1 ) Common stock repurchased (b) — — ( 14,896 ) ( 9 ) ( 219 ) — — — ( 228 ) Excise tax on common stock repurchased — — — — ( 1 ) — — — ( 1 ) Common stock issued for: Stock options exercised and restricted stock awards — — 3,135 1 1 — — — 2 Stock-based compensation expense — — — 1 12 — — — 13 Dividends declared - noncontrolling interest of subsidiary prefer

, ITEM 1. FINANCIAL STATEMENTS

PART I, ITEM 1. FINANCIAL STATEMENTS Table of Contents CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (continued) Nine Months Ended September 30, 2023 Preferred Stock Common Stock (Dollars in millions, except per share data; shares in thousands) (unaudited) Shares Amount Shares Amount Capital Surplus Retained Earnings Accumulated Other Comprehensive Income (Loss) (a) Noncontrolling Interest Total Balance, December 31, 2022 31,686 $ 1,014 537,101 $ 336 $ 4,840 $ 3,430 $ ( 1,368 ) $ 295 $ 8,547 Adjustment to reflect adoption of ASU 2022-02 — — — — — 4 — — 4 Net income — — — — — 251 — 4 255 Other comprehensive income — — — — — — 160 — 160 Cash dividends declared: Preferred stock — — — — — ( 8 ) — — ( 8 ) Common stock ($ 0.15 per share) — — — — — ( 82 ) — — ( 82 ) Common stock repurchased — — ( 159 ) — ( 4 ) — — — ( 4 ) Common stock issued for: Stock options exercised and restricted stock awards — — 677 — 5 — — — 5 Stock-based compensation expense — — — — 22 — — — 22 Dividends declared - noncontrolling interest of subsidiary preferred stock — — — — — — — ( 4 ) ( 4 ) Balance, March 31, 2023 31,686 1,014 537,619 336 4,863 3,595 ( 1,208 ) 295 8,895 Net income — — — — — 325 — 4 329 Other comprehensive income (loss) — — — — — — ( 151 ) — ( 151 ) Cash dividends declared: Preferred stock — — — — — ( 8 ) — — ( 8 ) Common stock ($ 0.15 per share) — — — — — ( 82 ) — — ( 82 ) Preferred stock conversion ( 4,936 ) ( 494 ) — — — — — — ( 494 ) Common stock repurchased — — ( 575 ) — ( 5 ) — — — ( 5 ) Common stock issued for: Stock options exercised and restricted stock awards — — 1,872 — — — — — — Series G preferred stock conversion — — 19,743 12 481 — — — 493 Stock-based compensation expense — — — 1 ( 14 ) — — — ( 13 ) Dividends declared - noncontrolling interest of subsidiary preferred stock — — — — — — — ( 4 ) ( 4 ) Balance, June 30, 2023 26,750 520 558,659 349 5,325 3,830 ( 1,359 ) 295 8,960 Net income — — — — — 137 — 5 142 Other comprehen

, ITEM 1. FINANCIAL STATEMENTS

PART I, ITEM 1. FINANCIAL STATEMENTS Table of Contents CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended September 30, (Dollars in millions) (Unaudited) 2024 2023 Operating Activities Net income $ 624 $ 727 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for credit losses 140 210 Deferred income tax expense (benefit) ( 21 ) 23 Depreciation and amortization of premises and equipment 41 41 Amortization of intangible assets 33 36 Net other amortization and accretion 8 14 Net (increase) decrease in trading securities 604 1,063 Net (increase) decrease in derivatives ( 3 ) ( 289 ) Stock-based compensation expense 44 21 Securities (gains) losses, net ( 2 ) ( 1 ) Loans held for sale: Purchases and originations ( 2,072 ) ( 1,834 ) Gross proceeds from settlements and sales 1,392 860 (Gain) loss due to fair value adjustments and other ( 57 ) 32 Other operating activities, net 346 31 Total adjustments 453 207 Net cash provided by operating activities 1,077 934 Investing Activities Proceeds from maturities of securities available for sale 614 678 Purchases of securities available for sale ( 271 ) ( 228 ) Proceeds from prepayments of securities held to maturity 44 40 Proceeds from sales of premises and equipment 8 — Purchases of premises and equipment ( 27 ) ( 23 ) Net (increase) decrease in loans and leases ( 1,221 ) ( 3,784 ) Net (increase) decrease in interest-bearing deposits with banks 43 ( 533 ) Other investing

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