First Horizon Corp Reports Full Year 2023 Earnings with Notable Loan Growth
Net Income Available to Common Shareholders: $865 million for full year 2023, with an EPS of $1.54.
Adjusted Net Income: $806 million or $1.43 on an adjusted EPS basis.
Loan Growth: Period end loans grew by $3 billion or 5% in 2023.
Deposit Increase: Period end deposits increased by $2 billion or 4%.
Asset Quality: Net charge-offs were $170 million or 0.28%, with the allowance for credit losses to loans ratio increasing to 1.40%.
Capital Ratios: Common Equity Tier 1 (CET1) ratio improved to 11.4%, with a total capital ratio of 14.0%.
On January 18, 2024, First Horizon Corp (NYSE:FHN) released its 8-K filing, announcing its full-year 2023 financial results. The company, which is the parent of First Tennessee Bank and a significant player in the regional banking sector, reported a net income available to common shareholders of $865 million, translating to earnings per share (EPS) of $1.54. This performance is slightly down from the full year 2022 net income of $868 million, or $1.53 per share. Adjusted for notable items, the 2023 net income was $806 million, or $1.43 per share.
First Horizon Corp, with its strong presence in Tennessee and a network of about 200 branches, relies heavily on its regional banking operations, contributing approximately 65% to its revenue. The bank's capital markets operations contribute another 25%, with the remaining revenue coming from non-strategic and corporate operations. The bank's focus on a diversified range of banking products has allowed it to maintain a 13% deposit market share in its home state.
The company's performance in 2023 was marked by a 5% growth in loans, which the Chairman, President, and CEO Bryan Jordan attributed to prudent risk management and robust capital levels. The bank also ran a successful deposit campaign, raising $6 billion in new-to-bank deposits. However, the bank did face challenges, including a normalization of credit from very benign levels in 2022, which led to an increase in provision expense from $95 million to $260 million. Net charge-offs also increased to $170 million, or 0.28% of loans, including a significant loss on a single relationship in the third quarter.
Despite these challenges, First Horizon Corp's capital ratios improved, with the CET1 ratio increasing to 11.4% and the total capital ratio to 14.0%. The bank's net interest income grew by $148 million, benefiting from short-term interest rate increases and an 8% average loan growth. The net interest margin also increased by 32 basis points to 3.42%.
Asset quality showed signs of stress with the allowance for credit losses to loans ratio increasing to 1.40% from 1.33% in the prior year. However, the bank's effective tax rate improved to 18.8% in 2023 from 21.3% in 2022, including a $35 million net benefit from tax-related notable items.
First Horizon Corp's financial achievements in a challenging economic environment underscore the importance of its strategic initiatives and disciplined credit approach. The bank's ability to grow loans and deposits in a tightening monetary environment demonstrates the strength of its customer relationships and the effectiveness of its business model.
The bank's financial stability and strategic positioning, as it celebrates 160 years in business, suggest that it is well-equipped to navigate future economic cycles and continue delivering value to its shareholders.
For a detailed breakdown of First Horizon Corp's financial results and to understand the implications for investors, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from First Horizon Corp for further details.
This article first appeared on GuruFocus.
