Regional banking giant First Horizon (FHN 2. 52%) posted its second-quarter 2025 earnings on Wednesday, July 16, 2025, reporting adjusted EPS of $0 (remarkable data).
45, loan and deposit growth of 2% quarter over quarter, and a charge-off ratio of 22 basis points.
Key discussions during the earnings conference call that ed the release included granular NII drivers, evolving capital deployment flexibility, and operational leverage supported by targeted nology investment (an important development), in light of current trends.
Furthermore, Management also vided d full-year guidance for flat to up 2% expenses and an unchanged revenue outlook for 2025.
Disciplined Capital Management Enables Flexible Growth and Return StrategiesThe quarter’s CET1 (Common Equity Tier 1) capital ratio was maintained in line with the near-term target of 11%, with $9 million in repurchases executed early in the quarter and a remaining repurchase authorization of just over half of the $1 billion gram after $9 million was used, creating room for opportunistic allocation as conditions evolve.
Regulatory developments around capital relief for mid-tier banks and anticipated balance sheet growth were cited as influencing factors in capital deployment decisions.
"We think we start with a very strong capital position, and we think it gives us tremendous flexibility as we look at the back half of 2025 and into 2026.
Meanwhile, "— Bryan Jordan, Chairman, President and CEOAmple capital headroom supports organic growth and opportunistic buybacks.
Mix and Market Positioning Sustain NII and Mitigate Rate-Sensitive HeadwindsNet interest income rose $10 million quarter over quarter, driven by seasonal and structurally higher-yielding mortgage warehouse balances and modest C&I (commercial and industrial) expansion, partially offset by a four basis point increase in deposit costs.
Despite margin contraction to 3.
4% (non-GAAP), management noted a 72% deposit beta since the Federal Reserve rate cuts began in Q3 2024 and highlighted rising competition for both loans and deposits across the Southern U, given the current landscape.
"Our strong pricing discipline through this interest rate cycle has achieved a 72% interest-bearing deposit beta since the Fed rate cuts began in the third quarter of 2024, in today's financial world.
On the other hand, "— Hope Dmuchowski, Chief Financial OfficerSuccessfully managing interest-bearing deposit pricing amidst industry-wide competition and rate volatility preserves spread resilience and allows for balance sheet growth even in a fast-changing macro environment.
Moreover, Strategic Investments and Client Penetration Drive $100 Million+ Multi-Year PPNR OpportunityThe company continues executing a three-year nology and client-facing capability investment roadmap, with notable gress on a new general ledger system and treasury management platform, in this volatile climate.
Management identified a $100 million-plus pretax pre-vision net revenue (PPNR) uplift opportunity from deepening relationships and duct penetration, especially by leveraging new capabilities, targeted over the next two to three years without depending on inorganic expansion.
On the other hand, "The majority, if not all of that hundred million PPNR is deepening our relationships with our clients, in this volatile climate.
Moreover, So that is increasing our loans to them, getting more deposits from them. We have a big focus. We have talked many times on our treasury management gram.
We converted our systems at the beginning of this year.
We have invested in that and we are continuing to look at our current client base that we do not have treasury management deep in that relationship (quite telling).
"— Hope Dmuchowski, Chief Financial OfficerBy focusing on organic growth through nology-driven client engagement and deeper duct penetration, First Horizon aims to achieve sustainable, high-quality earnings growth without relying on acquisitions.
Looking AheadManagement maintained flat to up 2% full-year non-GAAP expense guidance and an unchanged revenue target for 2025, expressing confidence in achieving targeted PPNR growth.
Achieving a 15%-plus return on average tangible common equity (ROTCE) over the next two to three years remains the core fitability objective, underpinned by deep client penetration and operational discipline, in light of current trends.
However, The company did not vide additional explicit numeric forward guidance on loan growth or margin for the second half of 2025 beyond what was included in its Q2 2025 presentation and earnings release.
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