How Does First Horizon Company Work?

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How Does First Horizon Company Work?

First Horizon Corporation, a prominent regional financial services firm, has showcased strong performance and adaptability. The company reported a net income of $213 million for Q1 2025, with earnings per share at $0.41.

With $82.1 billion in assets as of June 30, 2025, First Horizon operates across 12 states, primarily in the Southeastern U.S., through its banking subsidiary, First Horizon Bank.

First Horizon offers a broad range of financial services, including commercial banking, private banking, wealth management, and mortgage banking. Its consistent inclusion on Forbes' Best-In-State Banks list for 2024 and 2025 highlights its customer focus and effective regional strategy. Understanding its operational model and revenue generation is key to grasping its market position and value creation. This includes analyzing its First Horizon BCG Matrix to understand its product portfolio's strategic placement.

First Horizon Corporation's core operations revolve around delivering a comprehensive suite of financial services, primarily targeting individuals, businesses, and institutions across the Southeastern United States. The company's value proposition is built on its integrated approach to banking, private banking, wealth management, and mortgage banking.

Core Banking Services

First Horizon Bank, the company's banking subsidiary, operates approximately 500 banking offices. These offices, along with 400 banking centers under the FHN Financial brand, form the backbone of its customer interaction and service delivery.

Asset Management

As of June 30, 2025, First Horizon Corporation managed assets totaling $82.1 billion. This substantial asset base underscores the company's significant role in the financial landscape.

Operational Focus

The company emphasizes tailored solutions and a strong associate culture, focusing on robust credit performance and disciplined expense control. This operational framework is key to its business model.

Strategic Investments

A significant strategic initiative involves investing $100 million over three years in technology upgrades. This investment aims to enhance digital banking capabilities and improve customer experience.

Regional Strength and Differentiation

First Horizon's hyper-localized approach, particularly in states like Tennessee, Mississippi, and Alabama, allows it to build deep community ties. This strategy avoids the overhead of national networks and tailors offerings to local economic needs, fostering growth and differentiation.

• Low-cost deposit acquisition through strong local relationships.
• Efficient operations driven by regional focus.
• Tailored financial solutions for local economies.
• Enhanced customer service through community embedding.
• Strategic advantage in understanding regional market dynamics.

This localized strategy is a critical component of the Growth Strategy of First Horizon, enabling it to effectively serve its customer base and maintain a competitive edge.

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First Horizon Company's revenue generation is primarily driven by its extensive financial services, with a strong emphasis on net interest income. This core component, alongside various fee-based services, forms the backbone of its monetization strategy. Understanding First Horizon operations reveals a business model focused on leveraging its financial expertise to serve a broad customer base.

Net Interest Income Dominance

In 2024, net interest income constituted a significant portion, approximately 79%, of First Horizon's total revenues. This highlights the company's core function in managing interest-earning assets and liabilities.

Non-Interest Income Streams

Fee and other non-interest income contributed around 21% to total revenues in 2024. These diverse streams are vital for overall financial performance and include various service charges and commissions.

Q1 2025 Revenue Performance

For the first quarter of 2025, First Horizon reported total revenues of $812 million. Net interest income saw a nearly 1% year-over-year increase to $631 million.

Net Interest Margin Expansion

The net interest margin expanded by 5 basis points from the prior-year quarter to 3.42% in Q1 2025. This indicates improved profitability on its core lending and deposit-taking activities.

Q2 2025 Financial Highlights

In the second quarter of 2025, First Horizon's revenue reached $830 million. Adjusted net income available to common shareholders was $229 million, an increase from the previous quarter.

Capital Return Strategies

The company actively engages in returning capital to shareholders through share repurchases, with over $225 million in stock repurchases in a recent quarter. A quarterly common stock dividend of $0.15 per share is also maintained.

First Horizon's business model is further strengthened by its focus on pre-provision net revenue (PPNR) growth, with a target of a $100 million uplift for 2025. Its PPNR as a percentage of assets reached 4.7% in a 2025 stress test, significantly exceeding the peer median of 2.3%. This outperformance is attributed to its counter-cyclical businesses, including fixed income, loans to mortgage companies, and mortgage operations, demonstrating a robust operational framework for First Horizon Company.

Key Revenue Drivers and Strategic Focus

First Horizon Company's revenue streams are diverse, reflecting a comprehensive approach to financial services. The company's strategy involves not only maximizing net interest income but also growing non-interest income through various fee-based services, aligning with its overall Mission, Vision & Core Values of First Horizon.

• Net Interest Income: The primary revenue driver, stemming from lending and deposit activities.
• Non-Interest Income: Includes fees from brokerage, trust, insurance, and other services.
• PPNR Growth: A strategic focus to enhance profitability before provisions.
• Capital Allocation: Share repurchases and dividends are key to returning value to shareholders.
• Counter-Cyclical Businesses: Leveraging specific market segments for performance stability.

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First Horizon Company has undergone significant strategic adjustments, notably after the termination of its merger with TD Bank in 2023. This led to a substantial $100 million investment in technology over three years to modernize systems and bolster its competitive standing.

Post-Merger Strategy Shift

Following the 2023 merger termination, First Horizon initiated a major technology upgrade, investing $100 million over three years. This move aims to enhance digital banking capabilities and create new revenue streams.

Operational Efficiency Focus

The company is prioritizing disciplined expense control to navigate uncertain interest rate environments and regulatory changes. For 2025, expense guidance has been revised to a flat to 2% increase.

Margin Management Success

First Horizon has effectively managed its deposit costs, leading to improved net interest margin performance. This strategic management contributes to overall financial stability.

Organic Growth Emphasis

The company's current strategy centers on organic growth, with mergers and acquisitions not being a primary focus. This approach allows for concentrated investment in existing operations and customer relationships.

Competitive Strengths and Customer Focus

First Horizon's competitive edge is built on regional market leadership and strong brand recognition, particularly in Tennessee where it holds a significant deposit market share. Its commitment to customer satisfaction is a key differentiator, allowing it to excel in areas like trust and branch experience, as recognized on Forbes' Best-In-State Banks list for 2024 and 2025.

• Regional market leadership, especially in Tennessee with a 13% deposit market share.
• Diversified loan portfolio across key states including Florida, Tennessee, Texas, North Carolina, and Louisiana.
• Strong customer loyalty fostered by a hyper-localized approach, leading to loan portfolio growth averaging 8% annually in top-ranked states.
• Higher pre-provision net revenue as a percentage of assets compared to peers, supported by counter-cyclical businesses like fixed income and mortgage operations.
• Recognition on Forbes' Best-In-State Banks list for 2024 and 2025 highlights customer service excellence.

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First Horizon Corporation maintains a significant regional footprint, particularly in the Southeastern United States, operating across 12 states and holding a substantial 13% deposit market share in Tennessee. Its consistent recognition on Forbes' Best-In-State Banks lists for 2024 and 2025 underscores its competitive strength against larger national institutions, especially in trust and digital services. As of June 30, 2025, the company reported total assets amounting to $82.1 billion.

Industry Position

First Horizon is a key player in the Southeastern US banking sector, distinguishing itself through strong regional market share and customer loyalty. Its operational framework emphasizes community engagement and tailored services, allowing it to compete effectively with larger national banks.

Key Risks and Headwinds

The company faces risks inherent to the financial services industry, including regulatory shifts and economic cycles that can impact interest income. Intense competition for deposits and the need to manage interest rate fluctuations are ongoing challenges.

Strategic Initiatives for Profitability

First Horizon is focused on organic growth and disciplined expense management, with projected expense growth between flat and 2% for 2025. Investments in technology are crucial for enhancing customer experience and maintaining a competitive edge.

Future Outlook and Growth Drivers

The company anticipates increased activity in its mortgage warehouse business in late 2025, driven by expected lower treasury rates. A robust capital position and a diversified business model are expected to support sustained long-term value and market expansion.

Financial Performance and Projections

Analysts project continued growth for First Horizon, with an estimated average Earnings Per Share (EPS) of $1.69 for 2025 and revenue anticipated to reach $3.38 billion. The company aims for a return on tangible common equity (ROTCE) exceeding 15% in the coming years.

• Projected 2025 EPS: $1.69
• Projected 2025 Revenue: $3.38 billion
• Target ROTCE: over 15%
• Projected Expense Growth (2025): flat to 2%

Understanding the operational framework of First Horizon reveals a business model prioritizing safety, soundness, profitability, and growth. This approach, coupled with a strong capital base and community focus, positions the company to navigate economic uncertainties and expand its market presence. The company's commitment to strategic technology investments aims to bolster its customer service process and differentiate its offerings in a competitive landscape. For a deeper dive into the competitive environment, explore the Competitors Landscape of First Horizon.

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