First Horizon's Q1'24 Earnings: Strong Adjusted EPS and Revenue Growth, Margin Expansion, and Countercyclical Businesses
First Horizon Corporation (NYSE: FHN) delivered a robust performance for the first quarter of 2024, characterized by significant adjusted earnings per share (EPS) growth and a notable increase in revenue driven by margin expansion and countercyclical business improvement. The company's credit performance remained stable, while its community engagement efforts, highlighted by the Grants for Good campaign, and its confident capital deployment strategy, including significant stock repurchases, were noteworthy milestones in the quarter.
Key takeaways from the earnings report were:
- Adjusted EPS rose to $0.35, up 9% from the previous quarter, driven by higher revenue and reduced expenses.
- Revenue growth was fueled by margin expansion and improvement in countercyclical businesses.
- Non-performing loans (NPLs) increased due to two specific credits in senior living and consumer finance.
- The company repurchased over $150 million of stock and maintains a strong common equity tier 1 (CET1) ratio of 11.3%.
- Loan demand is expected to improve over the year, despite a slow start.
The company's outlook for the rest of 2024 is optimistic, with expectations for non-interest income growth of 6% to 10% and maintained expense guidance, indicating further operational efficiency. First Horizon anticipates improved loan demand over the year and plans to repprice loans and securities to increase spreads in preparation for regulatory thresholds.
Despite some challenges, such as increased NPLs and commercial real estate (CRE) loan revaluations due to higher interest rates, the company's overall credit performance remained robust, and its capital levels remained solid.
First Horizon's earnings call highlighted the company's resilience and adaptability in a dynamic financial landscape. With its strong start to the year and clear vision for the future, the company is well-positioned to continue maximizing shareholder value and fostering community relationships as it navigates through 2024.