First Horizon Corporation

Welcome to the First Horizon Corporation Four Quarter 2021 Earnings Release. My name is Juan and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. I will now hand over to your host, Ellen Taylor, Head of Investor Relations to begin with. Please, Ellen, go ahead.

Hey, thanks, Juan. Good morning, everyone. We really appreciate you joining us on such a busy day. First, our president and CEO, Brian Jordan, will provide opening remarks. And then we're really excited to have the newest member of the executive team, Chief Financial Officer, Hose Domchowski, to cover off on our financials. Then, of course, we'll be happy to take your questions. We're also really pleased to have our Chief Credit Officer, Susan Springfield, with us as well. Our remarks today will reference our earnings presentation, which is available on our website at ir.firsthorizon.com. As always, I need to remind you that we will make forward-looking statements that are subject to risk and uncertainties, and we ask you to review the factors that may cause our results to differ from our expectations on page two of our presentation and in our SEC filings. Additionally, please be aware that our comments will refer to adjusted results, which exclude the impact of notable items. These are non-GAAP measures, so it's really important for you to review the GAAP information in our earnings materials and on page three of our presentation. And last but not least, our comments reflect our current views, and you should understand that we aren't obligated to update them. And now I'll hand it over to Brian.

Thank you, Ellen. Good morning, everyone, and thank you for joining us. Well, I'll start on slide five. While 2021 proved to be an interesting year for the U.S. economy and the banking industry as a whole, I'm very proud of the resilience of the First Horizon team and the continued progress and results that we delivered, once again highlighting the benefit of our business model. The team remained strongly focused on understanding and anticipating the needs of prospects and clients alike in order to deliver value-added advice services across an increasingly competitive landscape. Our specialty businesses and higher growth markets helped to drive the momentum in the second half of the year, and coupled with funding discipline, a focus on expenses and improving credit quality resulted in EPS of 48 cents per share in the fourth quarter and an adjusted return on tangible common equity of 17.5%. For the full year, adjusted EPS was $2.07, up $0.85 over 2020, driven by the benefit of the Iberia Bank merger. While pressure on short-term rates continued and the competitive landscape amplified, our client-focused value proposition with a broader product set continued to provide a point of differentiation and generate better than expected results. Strong focus on deposit pricing helped drive net interest income up 1% despite a $5 million reduction in net merger accretion and Paycheck Protection Program benefits. Core NII was up 3% with commercial loan growth of 2%, excluding the impact of the PPP portfolio. We continue to see momentum in our commercial business and end of the quarter with unfunded commitments up 8% to just over $20 billion. Our focus on reducing our deposit costs has really paid off. In the fourth quarter, our interest-bearing deposit costs declined six basis points and declined 18 basis points from year-end 2020. As many of you know, we are extraordinarily well-positioned to benefit in a rising rate environment and a strengthening economy. We ended the quarter with our interest rate sensitivity profile of a 16% increase in net interest income to a 100 basis point rate shock across the yield curve. As expected, we continue to see further moderation of fixed income and mortgage banking fees given both the impact of higher long-term rates and seasonality, as well as additional pressure from our recent reduction in NSF OD pricing. Expense control is an area of focus, and expenses were down 1% despite a $3 million increase tied to special bonuses we paid to our frontline associates, primarily designed to reward associates who have served clients continuously during the pandemic throughout our banking and our call centers. Our asset quality trends continued to show strong performance, highlighted by net charge-offs of only one basis point and a 21% decrease in non-performing loans. The stabilizing economic outlook and overall credit quality improvement drove another robust reserve release with provision credit of $65 million in the quarter. Our capital levels remained strong with a CET1 ratio of nearly 10%, and given the lower growth environment, We increased our return of capital to shareholders, including the repurchase of 9 million common shares in the quarter and a total of 24 million shares repurchased for the year. This drove a year-over-year decrease of 4% in our share count. Despite the impact of dividends and buybacks, tangible book value per share of $11 was up 1% in the quarter and 8% for the full year. We have made substantial progress towards our upcoming systems conversion in February, including additional mock conversions, further upgrades to online banking platforms, and finalizing client communications. We believe the planning and focus on investments in technology, products, and people positions us well to capitalize further on the power of the combined platform into 22 and beyond. As of the fourth quarter, we have identified approximately $45 million in revenue synergies related to the merger. We remain confident in our ability to deliver at least $200 million in net annualized cost savings by the fourth quarter of this year. As the world continues to deal with the impacts of COVID and variants, I'm very optimistic about the continued macroeconomic recovery and the momentum and strength of our combined organization is providing towards our commitment to delivering top quartile returns. I am very grateful for the dedication and hard work of our associates as they continue to navigate the various impacts of the pandemic and at the same time deliver value for all of our constituents, clients, communities, and shareholders. I'm also pleased to introduce our new CFO, Hope Domchowski. While she joined our team less than two months ago, she has already added tremendous value. I'm confident that her expertise, forward-thinking passion for change, and commitment to excellence will be instrumental in helping to drive continuous improvement. With that, let me turn it over to Hope to take the call from here. Welcome.