Overview of Financial Performance

First Horizon Corporation, a financial holding company headquartered in Memphis, Tennessee, reported strong financial results for the third quarter of 2024. The company’s net income available to common shareholders was $213 million, or $0.40 per diluted share, up from $184 million, or $0.34 per diluted share, in the previous quarter and $129 million, or $0.23 per diluted share, in the same quarter a year ago.

For the first nine months of 2024, net income available to common shareholders was $581 million, or $1.06 per diluted share, compared to $689 million, or $1.23 per diluted share, for the same period in 2023. The decrease was largely driven by higher funding costs and lower noninterest income, partially offset by lower provision for credit losses.

Revenue and Profit Trends

Net interest income, which is the company’s largest source of revenue, decreased $2 million from the previous quarter to $627 million, but increased $22 million from the same quarter a year ago. The net interest margin decreased 7 basis points to 3.31%, driven by increased deposit costs and higher levels of brokered deposits, partially offset by improvement in loan repricing.

Noninterest income increased $14 million, or 8%, from the previous quarter, largely driven by an increase in fixed income production. Compared to the same quarter a year ago, noninterest income increased $27 million, or 16%, also primarily due to higher fixed income production.

Provision for credit losses decreased to $35 million in the third quarter of 2024, compared to $55 million in the previous quarter and $110 million in the same quarter a year ago. The decrease reflects the impact of a large credit loss in 2023.

Noninterest expense increased $11 million, or 2%, from the previous quarter, largely due to $15 million in Visa derivative valuation expense. Compared to the same quarter a year ago, noninterest expense increased $37 million, or 8%, primarily from higher personnel expense, expenses related to strategic investments, and the Visa derivative valuation expense.

Strengths and Weaknesses

One of the company’s key strengths is its diversified revenue streams, with a balance between net interest income and noninterest income. The growth in fixed income production, mortgage banking income, and brokerage and wealth management fees has helped offset the impact of higher funding costs.

However, the company’s net interest margin has been under pressure due to the rising interest rate environment and increased deposit costs. The company has also seen an increase in nonperforming assets, particularly in the commercial real estate portfolio, which could put pressure on future credit quality and earnings.

Outlook for the Future

Looking ahead, the company expects continued loan growth, particularly in the commercial and consumer real estate portfolios. The company also anticipates further improvement in fixed income and wealth management revenues, which should help offset the impact of higher funding costs.

The company’s capital position remains strong, with a Common Equity Tier 1 ratio of 11.23% as of September 30, 2024. This provides the company with the flexibility to continue investing in strategic initiatives and returning capital to shareholders through share repurchases and dividends.

Overall, First Horizon Corporation’s third quarter results demonstrate the company’s ability to navigate a challenging operating environment and maintain a solid financial position. The company’s diversified business model, focus on risk management, and strategic investments position it well for continued success in the future.