First Horizon maintains 2025 guidance, notes uncertainties

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First Horizon slightly beat analyst expectations in its first quarter, as the benefit of falling deposit costs was offset by the continuation of weak loan growth.

The Memphis, Tennessee-based bank also maintained its earnings guidance for 2025, despite increasing uncertainty in the macroeconomic environment.

“Our business model prioritizes safety and soundness, profitability, and growth, equipping us to manage uncertainties and adapt to economic changes,” said President and CEO Bryan Jordan in a statement Wednesday. 

He added that across its history, the $81.5 billion-asset company has performed “through diverse economic conditions.”

Despite the chaos on Wall Street this month due to uncertainty around President Donald Trump’s tariff policies, banks’ first-quarter earnings haven’t shown many signs of cracks. Still, leaders have warned that a slowdown, or even a recession, could be in store.

In the first quarter, First Horizon reeled in $218 million in net income, up 14% from a year ago and ahead of analyst estimates, the company said Wednesday. Earnings per share was 41 cents, compared with analyst estimates of 40 cents.

First Horizon is forecasting 2025 revenue growth to be between flat and 4%. However, the bank noted in its earnings report Wednesday that “revenue composition” will be driven by the pace of interest rate cuts and macroeconomic variables. In January, the bank had said it anticipated three interest rate cuts this year. 

Net charge-off ratio expectations, of between 0.15% and 0.25%, remained unchanged. In the first quarter, the bank saw a net charge-off ratio of 0.19%, an annual decrease of eight basis points. 

First Horizon bought back $360 million of shares, as part of a $1 billion repurchase plan approved in October. The bank is targeting a common equity tier 1 ratio of between 10.5% and 11% in 2025 as it returns excess capital to shareholders, and budgets for some modest loan growth. 

Loans in the first quarter of $61.6 billion marked a 1% climb from the year prior, as lending to mortgage companies saw seasonal reductions and commercial real estate balances declined due to paydowns. The return First Horizon earns on its loans has also come down following the rate cuts by the Federal Reserve last year.

First Horizon has also been working to reduce deposit costs, while maintaining its customers. Average deposits of $64.5 billion decreased 1% from the year-ago quarter, though that included a paydown of $700 million in costly brokered certificates of deposit.

First Horizon was able to keep a lid on expenses, as the completion of certain technology projects have helped cut down on costs.The bank had to balance its expenses after having to overhaul its strategic plan in 2023, when its planned acquisition by TD Bank Group fell through.

“We faced an unforeseen future as an independent company,” Hope Dmuchowski, chief financial officer at First Horizon Bank, told American Banker last year. Dmuchowski had an arduous task in front of her, but she didn’t face it alone. “Our team went into overdrive.”

First Horizon launched a three-year, $100 million investment in its technology, starting with an infrastructure upgrade. The bank spent last year ramping up the tech that powers its general ledger and treasury management systems. 

Now that some of the internal projects are completed — not quite two years into the initiative — the bank hopes to add more customer-facing innovation to its docket, like improving its mobile and online banking.