Release Date: April 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the outlook for Net Interest Income (NII) and how it might be affected by rate cuts?
A: (Hope Dmuchowski - Senior EVP & CFO, First Horizon Corporation) The NII outlook is sensitive to rate cuts due to the asset-sensitive nature of our balance sheet. Fewer rate cuts would push us towards the higher end of our guidance range, while more rate cuts would place us at the lower end. The timing of these rate cuts significantly impacts our ability to predict deposit costs for the year.
Q: What are the expectations for loan yields and loan demand across your markets?
A: (Hope Dmuchowski - Senior EVP & CFO, First Horizon Corporation) We expect loan yields to potentially increase as cash flows continue to mature. Loan demand is moderate, varying significantly across different regions. Some areas like the Carolinas show strong demand, while others are softer. We anticipate loan demand to remain modest overall but may improve as economic conditions become clearer.
Q: Could you provide insights into the recent increase in nonperformers and the outlook for credit trends in 2024?
A: (Susan L. Springfield - Senior EVP & Chief Credit Officer, First Horizon Bank) The increase in nonperformers was driven mainly by two credits and is not concentrated in any specific industry. We are maintaining a conservative approach to grading and monitoring potential weaknesses. The overall credit performance is stable, and we expect this trend to continue, influenced by interest rate movements.
Q: How are you managing the commercial real estate (CRE) portfolio, especially concerning loan maturities and refinancing?
A: (Susan L. Springfield - Senior EVP & Chief Credit Officer, First Horizon Bank) We are actively working with borrowers on refinancing and restructuring, where necessary, to align with current market conditions. Our disciplined underwriting approach over the years has provided a cushion in our CRE portfolio, allowing us to manage maturities effectively. We are seeing successful outcomes from these strategies, including additional equity contributions from borrowers.
Q: What is driving the fixed income business's performance, and what are the expectations for the rest of the year?
A: (Hope Dmuchowski - Senior EVP & CFO, First Horizon Corporation) The fixed income business benefited from pent-up demand and improved market conditions in Q1. However, we anticipate a normalization of activity levels as the year progresses, influenced by market expectations and interest rate movements. The business is expected to remain solid but not at the exceptionally high levels seen in the first quarter.
Q: How is the bank preparing for potential regulatory changes as it approaches the $100 billion asset threshold?
A: (D. Bryan Jordan - Chairman, President & CEO, First Horizon Corporation) We are closely monitoring regulatory developments and preparing for increased compliance requirements. The strategy includes managing the balance sheet prudently and ensuring readiness for category IV regulatory standards. We are considering organic growth and strategic initiatives rather than relying solely on mergers and acquisitions to cross the threshold.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
