First Horizon Corp (FHN) November 5, 2026 Conference Transcript

Good afternoon, everyone. Next up, we have First Horizon Corporation, that's ticker FHN. First Horizon is a regional bank holding company headquartered in Memphis. It's one of the largest banks in southern U.S. Regional banking is their primary segment. Other businesses include specialty banking, fixed-income and capital markets, which operates under FHN Financial, as well as corporate banking. Assets at the end of the third quarter, $84 billion. Branches, a little over 400 branches. With us today, really happy to have Hope Duncchowski with us again today, Senior Executive Vice President and Chief Financial Officer. Hope has over 40 years of experience in the banking industry, and prior to joining First Horizon in 2021, she worked at Truist and the predecessor of Bank BB&T in a number of roles, And then she began her banking career in the leadership development program for the sales and trading division of Deutsche Bank. So thank you very much for being here.

Thank you for having me.

The format will be consistent with the rest of the day, some opening questions, and then I'll turn it over to the audience. So last year at BAB, you emphasized sustaining a 15% ROTC really as the baseline, not a ceiling. You delivered on that over the last four quarters, with the exception, obviously, the impact of the recent mortgage transaction. So can you just walk us through how the earnings profile has evolved over the last year and what gives you confidence that that trajectory can continue into next year?

Thank you. Thank you for having me here today. Really appreciate it, and thank you, everyone, for being here. Over the last two years, we've talked quite a lot to you all about how we took our three-year strategy document that we put together in 2024 And turned it into the Five Flags, which is really a five-page kind of North Star for our bankers and our company on what do we want to do and how do we want to go to market? Where do we have the right to add value in our client segment? And one of the things that we focused on is the $100 million of PPNR within our existing client book. So this is where we have clients that maybe have a commercial relationship with us, but they've never met with one of our wealth advisors. Or they have a checking account with us, but we've never introduced them to a private client advisor. They might have a commercial loan with us, but they don't have the treasury management relationship. So looking at the book of clients we had and said, how do we deepen these relationships? How do we continue to introduce the whole bank to existing and new clients? And so one, we've really focused on that. The other one is we've focused on how we use our balance sheet. We talk about loan-onlys. If a client is a loan-only, they have no other relationship with us, we will lead with that part of a relationship, but when it comes up for renewal, if it's still just a loan-only relationship, we exit those, and we've been exiting those over the last two years pretty consistently. We talk about our net loan growth is we've also exited some lower yielding assets, some clients that didn't have additional business with us, and redeployed that into additional client relationships where we're able to get a higher ROE on the loan and a better overall return on client profitability.

And then for new investors in the audience, what are one or two proof points from the past year that best illustrates the safety, soundness, profitability, and growth pillars really across the franchise that are at work?

Yeah, I think through, you know, the recent five years with the different credit cycles, the different interest rate environments, you know, it's amazing. We were here last year talking about a decreasing rate environment. We were going to get one in December. Was it going to be three or four or five rate cuts? And now we've had one increase and probably more to come. And so what we really focus on is through the cycle lending. We have a top quartile margin in our peer set with some of the best charge-offs through the cycle, bottom quartile or best quartile for charge-offs. So how do you make sure that when you're lending and you're entering into a relationship that it's a credit that's going to work through any interest rate cycle? We didn't sit here and say, oh, we're going to create a lending model earlier this year for if rates go down 75 basis points. We look at a relationship when it's renewing or we're entering into it, and we say, how will this credit and how will this client perform through any cycles? How do we stress it up, you know, 300 basis points of increase, or what happens if it goes down and how does the market perform? So we really focus on that client selection piece when we talk about five flags, not having loan only. It's really understanding your clients and helping them be successful through the cycles. Okay.

And as I mentioned, the headline last quarter, the mortgage portfolio sale. Can you just walk us through the decision-making process for that action?

Yeah, I feel like I'm going to be repeating myself again, but in line with our strategic plan that we put out there two and a half years ago, we talk about client relationships. We talk about using our balance sheet to continue to build. We had $4.5 billion of client mortgages that were seasoned, you know, that had been with us for years, you know, in some cases came from acquired organizations, of where we had almost no additional relationship with those clients. So I mentioned on the call it was $4.5 billion of mortgage sales, and those clients have $200 million of deposits with us. We still have those deposits. We did not sell the deposit relationships, but it didn't meet our five flags client relationship. And so we're going to take that $4.5 billion, which closed at the end of October, and we're going to redeploy that into client relationships, into our commercial businesses, into our specialty business. About half of that will be redeployed, where we're going to take a earning asset that was, you know, a $385 coupon below SOFR today and redeploy it into SOFR, somewhere between SOFR plus $150 to $250. And then we're going to offer them a swap. You know, it's an interest rate swap. We're going to talk to them about their wealth relationship. We're going to try to get their treasury management relationship. We're going to look at how can we add value to that client, and we could not do that with these mortgages. It did not fit our strategy. So we started with how do we restructure our mortgage business and align with Five Flags. We announced on the call that we had done a significant reduction in our mortgage offices. We've reduced the staffing there, and we've changed our model to really focus on existing clients. We have Sean McDougall here. He's been on the road with us for two days, our head of consumer. I brought him out to get a feel for what the investors ask. If somebody walks in and it's a client of ours and they want a mortgage and a consumer, we will absolutely do it, but we're not going to lead with that product in consumer. Private client and wealth. We're going to want the mortgage relationship as part of the relationship. We may lead with it if we have a prospect, but the mortgage officer will have the private client advisor with them. If a private client advisor gets to meet with somebody two or three times while they're closing their mortgage, you're paying for that referral. You're paying for that touch point. And so really, it is the last part of aligning our strategic plan for our Five Flags client strategy. We have additional, you know, I got asked on the call, and I've gotten asked a lot the last two days, why didn't you do more, or is there more to come? We have, you know, additional mortgages that are in the 2% and 3%, but they had client relationships with us. We looked at the mortgage in relation to, did they have a wealth relationship with us? How much deposits did they have with us? Are they a commercial client? And so we didn't just pick the lowest-yielding assets. We looked at a portfolio that was low-yielding assets for non-clients.

And the 4% accretion, how much of it is NII benefit versus expense savings versus other drivers? And just clarify, what's the base case assumption behind that accretion?

Yeah, so the base case is just taking that $4.5 billion, paying down a portion this quarter of wholesale funding, and putting it into our securities portfolio. I will note this quarter will be a mixed quarter because the mortgages were on our balance sheet through October, and now we're in the process of redeploying the proceeds now that the deal has closed. And so it will not be a this quarter number. It'll be a going into 2027 number. It's really based off redeploying that into securities in a rising rate environment. So we've already had one rate increase. We're expecting another one in December. So being able to immediately see that benefit on an earning asset. So that really is the base case. Just assuming you put it into some securities and then it just stays there, you get 4% or $45 million. There's some cost takeout with that. So we did self-servicing. And so you have a cost of third-party servicers built in there and just the cost of holding mortgages on your balance sheet. But that is the base case. 4% EPS and 150 basis points of ROTC next year, but as we redeploy it into a loan relationship, as we put it into our specialty businesses, we've talked a lot about our mix of regional banking and specialty businesses and how that gives us diversification in credit. The last couple of years, as deposits have grown, deposits come, you get a much higher deposit relationship with a regional bank client than you do with a specialty bank. So a specialty bank will come with more fee income and will have a higher spread. Most of our highest spreading spread loans are in those specialty businesses. Because we did not have the deposit growth we needed, we had to cap those businesses. They had slow growth. Now we're going to redeploy a lot of this into our specialty businesses. We're going to allow those businesses to go grow existing relationships and continue to add value to that 4% number.

Perfect. And you guided the NIM into the 350s for 4Q. We just talked the mortgage sale supports kind of a higher margin through the cycle. Can you walk us through the key NIM drivers from here and how you think about that NIM trajectory then looking on into 2027?

We have an asset-sensitive balance sheet, and so we saw our first rate increase at the end of September. We only had, you know, a week or two, depending on when that loan resets of benefit in the quarter. So you're carrying that headwind in of, you know, the entire quarter having 25 basis points more. About 56, 57 percent of our balance sheet is asset-sensitive, and we're able to pay down wholesale deposits, partially with the sale, but also partially due to timing of mortgage warehouse. We always talk about match funding mortgage warehouse. That's a business that is one of our most profitable businesses. It has a high-yielding loan, and it's the lowest charge-off business we've ever had. It has one basis points of charge-off annually, and it doesn't hold as much provision, so you're able to fund up and fund down. Mortgage warehouse typically peaks with the normal buying season of September for new mortgages. This year, it peaked in September. I'm sorry, it peaked in June instead of September. As rates went, 30-year rate went above 7%, we saw a lot of pullback in the new home purchase market in the U.S., and so that started coming down. So we've been able to pay down wholesale funds. We also will pay down additional in Q4 between the sale and the mortgage warehouse seasonality runoff, and so that gives you the yield side coming up while you're maintaining your deposit cost through the quarter.

And the 88% kind of post-transaction loan-to-deposit ratio gives you a lot of flexibility. How does that change your posture on deposit pricing, reliance of wholesale, brokered funding, and really your ability to grow the loan book without the need to match deposit growth dollar for dollar?

Yeah, it doesn't really change our deposit pricing. We weren't out there outpricing the market. We weren't top of the market or over the market trying to buy deposits. We have in our consumer business and our private client business, we have market rates. And so if you look for a money market account in Memphis versus Nashville, they're two very different competitive environments. And so we were really benchmarking to where the market was within each one of those or in our different states. And then our commercial clients, again, you've got to match where the market is. I talked on our call about our 60% beta through the cycle. Part of that is we have a back book to protect, and so if a client that we have a commercial relationship with, a wealth relationship is getting called on by another bank trying to move their relationship, we've got to match the rate. And so it's not about being front-footed in that rate increase, but really being protecting the back book. Now, wholesale funding is where you do make it up. We will not, you know, the next dollar of loan that we put on our books will not have to be wholesale funded. We'll be able to grow that with more client deposits, which is our core to where we're going forward and how we're going to increase that 4% EPS and that 150 basis points continue to deliver better and better each quarter as we deploy that into loan growth.

Okay. You mentioned the 60% through the cycle deposit beta. What levers do you have to protect client relationships and keep brokered reliance contained? And I guess the question is, what are the latest kind of read-through on client behavior coming out of 3Q as it relates to deposit pricing?

Our best defense with clients is to be in front of them. The more opportunities you have to talk to your clients, the more opportunities that they feel if another banker calls on them, That they call and say, hey, you know, this banker just called to me. They're offering that, and they give you the option to negotiate with them. You give them the option. If a banker's not talking to a client and somebody else's bankers are, that's where there's a problem. Sean has done a great job of working over the next couple years to reposition our franchise. We have de novo's opening. We just opened one a couple weeks ago in Houston. We have more coming in 27 and 28. We're re, some of our branches, you know, we had Iberian First Horizon had two different models for branches. We had bought Capital Bank in 2018. So if you go into our branches, even in the same city, and we had the SunTrust branches, forgetting about those, we, you know, we bought the SunTrust branches as part of the truest divestiture. So starting to get more of a consistent look and feel in our branches is part of that experience as well. But, you know, I tell our bankers all the time that are in our consumer and in our private client, I love checking accounts right now. Give me a non, you know, interest-bearing account, and that's our best customer that we can bring in the door. Sean and his team do a great job of saying, okay, if we start with a checking account, how do we then deepen it with, you know, possibly a mortgage, a HELOC, a savings account? If they qualify, how does, you know, our consumer team introduce them to our private client team to build that relationship?

Perfect. And then maybe one more for me, and then I'll open up to the audience. What are you hearing from commercial clients about their appetite to borrow in a rising rate environment? And where do you see the strongest growth opportunities over the next 12 months?

Our commercial clients are pretty agnostic to 25 basis points. This first one, you know, 25 basis points more, it really gets them back to where they were 12, 18 months ago. It's not like it was in 2023 where they'd been sitting at near zero interest and they hadn't seen a 4 or 5% Fed funds in some of their entire careers. They're comfortable with the rate increase. What we're hearing the most is about the cost of fuel, especially in construction. So we were with clients a few weeks ago that have projects either already started or about to come out of the ground on construction, and they taught me something I hadn't heard yet, which is the fuel surcharges they're getting. And I said, what do you mean about fuel surcharges? And they said, well, when we're getting supplies delivered, our suppliers are saying, well, we're going to give you a fuel surcharge. If you ask them how much it is, they say, we'll let you know the day we deliver it, because fuel's moving so much that they're passing that on to them, not in the price of goods, but in actual charge. One of our clients was saying, you know, maybe I take the next two months off, go to Europe for a while, and then when I come back, I'll start this project up again, and maybe I didn't waste $10,000, $20,000 on fuel surcharges. So that's the one that's really impacting them the most because of how quickly it's being passed on to them, and we believe it's temporary. So it's not a permanent increase in the cost of goods. The other that we've heard, you know, That has slowed some of their projects is the access to skilled workers. The data centers are relocating people, paying huge bonuses to come. If you're an electric or an electrician or an HVAC or, you know, you have a skill that they need, they will give you a bonus. They'll give you free housing. They're renting out. We actually have two data centers going up just south of Memphis right now. They've rented out entire hotels, and they have buses. They take people. And so they're also having a little bit of a delay trying to get the skilled workers in some parts of the southeast, which is slowing their projects.

Perfect. Why don't we open it up to the audience? There's one in the back. We'll go back to front.

Tony, I'm JP Morgan. On the fixed income business, you saw ADRs step up nicely in the third quarter. I think you called out payroll restructuring activity. We've seen rates decline over the past few weeks. Any near-term trends or comments you have on what the fixed income business has been looking like? Thank you. Yeah.

Our comment about some restructions, we said that in Q3, it was a pretty anemic ADR quarter for most of the quarter. However, we saw a couple weeks where people really repositioned their balance sheet that got us to the average we saw. It was just kind of a comment around the inconsistency that we saw during the quarter. I would say so far, you know, pre-election, we'll see how the election moves some things as far as the Treasury and the outlook, but it looks very consistent to the last two quarters. You have some good weeks and you have some low weeks. I don't see a big step up or step down in there in Q4 short of something significantly changing in the outlook that has, you know, we bank approximately half the banks in the U.S. through FHN Financials. If there was a reason that they started issuing more debt, they started doing restructuring, we would be a beneficiary of that.

Hi, Ryan Kenney with Morgan Stanley. So as you look to deepen relationships with clients and offer products like treasury management alongside loans... How robust is your platform right now? Any areas where you need to add more product, and how do you think about technology investment in the treasury management platform going forward? Thanks.

Thank you for the question. I feel like for the better part of two years, we were standing up here and sitting at conferences, Brian and I, talking about our $100 million three-year reinvestment into our platforms, and treasury management was number one on that. We came out of the MOE running two different treasury management platforms because we had to do upgrades to the platforms so that customers didn't go backwards when they converted. The only systems that we had after we finished the conversion with Iberia where we still ran two systems was treasury management. It is one of the biggest projects we did with that $100 million to get it up, to get a new treasury management platform in, to get all of our clients in there and continue to add new products. And so the treasury management platform we have is absolutely scalable. We're continuing to add more features, functionalities, and products onto that regularly. I don't think we have anything we need to do. We don't need to replace anything. We're on the system we believe that we can keep for a long time and grow with us and our clients.

Then just as a follow-up, as you look through your mortgage book, you identified the $4.5 billion where you didn't have as much additional relationship with the client. Is there more to do on that side as you look into your loan book, or is that...

We do not have any intent to do anymore. This was really a one-time restructuring as we looked at how we reposition our balance sheet in line with our core strategy for clients.

Thank you.

I'll continue on and see if others have.

Timur has one.

Thank you.

Thanks. Timur with UBS. I guess looking at your deposit beta assumption versus just the higher for longer environment and some of the increase in deposit costs that we've already seen, I guess, cycled to date. I guess what gives you comfort that, you know, of future rate hikes, you're only going to be capturing kind of 60% of that move, given some of the outsized increases that we've seen over the last couple of quarters, and maybe tying that into the restructuring that took place in 3Q with an 88% loan to deposit ratio now. Is the expectation that maybe some of that growth can be absorbed by the existing balance sheet and that ADA grinds higher, or is the expectation that you can kind of stay sub-90%, grow new loans, and still maintain that deposit beta at that 60% level? Thank you.

I will say, you know, starting with our confidence in 60%, we think that's reasonable based off what we saw in the last cycle. The last cycle, we saw a 70% beta as rates were rising, but that had the regional bank pricing right in the middle of it, where we all went to top of market and spent quarters trying to walk that back as so much money flowed out of the regional bank system, either completely out of the banking system or to the larger banks that were seen as too big to fail. So we looked at that and kind of modeled in that increase and said, okay, if we don't have that type of one-time top-of-the-market repricing, what do we think is realistic? Looking at our back book, you know, one of the things is we do have a lot of deposits with our commercial relationships. Those clients have a loan with us. Their loan is resetting up 25 basis points, and we're getting the benefit of that yield. So when they call us and say, well, I'm paying you 25 basis points more on my loan. How much can I get on the deposits? And it's a different discussion at that point in protecting the entire relationship. So the goal is to really look at not passing 100% of that beta on, but we've asked the bankers to target 50% or 60% of repricing that. When you mentioned what happened in the previous quarter on deposit costs, two things happened that quarter. The first is we had significantly more wholesale deposits that quarter. Our broker deposits went up as we saw mortgage warehouse on average balance was higher in Q2 than Q1. We also have a seasonality in our consumer business, which is we go out with rate specials or savings cash offers in the late spring, early summer. That is the time when customers are willing to move accounts. It's when they're rate seeking. It's when they're willing to start that process. So we start those campaigns in the late spring, early summer. And so you bring those clients in at a high cost and then you walk them back. So in our earnings the last three years, We always talk about in Q2 and Q3, you see the interest-bearing cost come up first, and then you see the expense hit in the future quarter for the non-interest-bearing, so where we had a cash offer. You know, if you opened a checking account, you would get $500. If you hit DDA, X amount of balances, if you then opened a savings account and put X amount with us, you then got an additional payout. So a lot of that was seasonality, not really tied to the market, but the seasonality of how our deposits go up. And if you look at our deposit pricing quarter to quarter for the last three years, it always ticks up in those summer months for our consumer portfolio, and we're always deeper in wholesale during the mortgage warehouse time when it usually peaks between April and September. So it's really those two factors that drove it up last quarter, not the market driving it up or us competing on rate only to get new clients. John?

Give us some thoughts about how you think about the long-term profitability potential of the company. You've hit your 15% RTC for a couple of quarters now. What do you guys need to see to set the bar higher, both internally and for us externally?

I think we pretty much already set the bar higher by putting in our earnings deck that this trade will create 150 basis points more ROTC next year. And we say that's the minimum before we redeploy it. So we didn't say exactly what number that would be. Tyler won't let me do it yet. He wants to wait for, you know, a big conference or something to put a deck up. I'm not sure. But we've already reset it, right? Without giving you a number, you can say, I'm going to use the average for the year. I'm going to use what you had in Q3 and add 150 basis points from it. What we'll do, you know, when we set guidance for next year is talk about where we're going to run the company next year. We have a stated target. We talk about our five flags framework we have. The five flag framework results in top quartile ROTC. Every single time we get in front of our employees, every time we're with our board, we say, we're going to do these things, and if we do these well with our clients, we will be top quartile ROTC. So that number will change as the industry changes. As the industry moves up to 19%, 20%, 21%, that's the number that we're going to target. We're not looking at a number just for what does First Horizon feel comfortable with. We're saying, how can we be a top-tier performer in our industry? It's great that they don't let IR up here, so you can blame them all day.

Maybe I'll ask a few more questions. Could you just talk about RM, banker hires in your footprint? It was a topic in the last bank that presented. And what about just retaining current bankers?

Yeah, we have strong retention of our bankers. We've put it in our decks before, 90%, 95%, depending on whether you pick three, five plus years. I think even in our investor day deck, we kind of had it broken out in tenure of our bankers by our business lines than our verticals. We acquired a franchise finance business from GE, and they love to say that every employee they brought over with the GE acquisition actually retired from First Horizon or still works here. The head of that business when we acquired it from GE is actually our head of wholesale banking. Todd Jones was here with me last year and so when we talk about we're not talking about five years, we're talking these long deep relationships. Our proprietary business that we talk about a lot, the head of that business has been with the company for decades and so have most of us bankers. Clients like to work with the same banker, know what they're gonna get through a cycle, know their bankers with them, and so that relationship goes both Our 90-plus percent retention of clients that we talk about in our earnings deck is correlated to their banker still being here, the person they trusted, the person that helped them build their business, the banker that maybe helped them when things weren't going great. And so we really focus on that client, that banker retention first and foremost, and then on where do we acquire new bankers. The strategy that we run, which is we do not want to rent our balance sheet, we're not trying to have the best, highest loan growth in the market, requires us to be, you know, thoughtful about what bankers are going to be successful in our company. So when we interview a banker, we talk about how do you bring a bank to your clients? How do you create 10, 20, 30-year relationships with these clients? Not, can you get us 10% loan growth? And so we have continued to add bankers. We've talked about this before. Florida, the Carolinas, and now Texas. We promoted a new regional president in Texas January 1st. He actually came out of our pro-pre business and had been in that business for quite some time, and he's now running our Texas market and has had great success. We put out press releases continually every time we hire a good banker in our market. So if you run AI through our press releases, you'll see that we've hired dozens of bankers this year across our markets.

And then a question on capital. CET1 came down to 10.3 after the actions that we've already talked about. The target's 10.25 to 10.5. How do you balance opportunistic buybacks with funding, those core relationships that we've also discussed?

One, I will say, you know, the 10.3 was a unique thing that somebody actually had to bring the accounting table in my office, and that person was Tyler. And I'm like, Tyler, help me understand how did we road this so much? And we built, you know, we only could buy shares back for a couple days before we decided to explore the opportunity of selling this mortgage. And at that point, you're not allowed to buy your shares back. And so we built capital all quarter and would have ended up well above 10.5 and then deployed it all by putting this mortgage portfolio in hell for sale the last day of the quarter. So that 10.3 is not really a good benchmark of what we do with our capital through the quarter. But we changed in our outlook that our current target, you know, going forward for Q4 and beyond for now is between 10.25 and 10.5. So we were targeting 10.5, and we're comfortable going down to 10.25. The way we think about deploying capital, which is what's your earnings next quarter, how much do you deploy into loan growth, and whatever's left over we do in share buybacks. We do not do an ASR for share buybacks currently. We are in the market every day. We will close the books on last month later this week, and I will get an updated forecast. We'll have an upgraded NIAC forecast. We'll have an updated loan forecast, and we will give our treasury team what the share buybacks are for the next month. We currently, as of this morning, had bought about approximately $100 million worth of shares back already this quarter.

Oh, thanks, Gerard. There's a question back there. John R. Marcus.

Oh, can you talk a little bit about the expenses, how you've been able to hold the expense growth rate, and is that something that you can continue to do in the future, or do you have to grow expenses like everybody else, or is it somewhere in between?

Yeah, flat was really a one-year adjustment back to the run rate that we needed as a company coming out of our three-year reinvestment in the franchise. So when we held our investor day in 2023, we said we're going to invest $100 million back into technology over the next three years to get us caught up on some legacy systems, upgrade some of our business systems. We really needed them to be competitive for the next chapter of First Horizon, as well as add staffing in our lines of businesses. We have significantly increased our fraud department, our cybersecurity department. So we were really coming out of three years of investing back into the company. And at the time, we said to many of you in this room that were there on Investor Day, we said, give us three years, and we'll bring our efficiency ratio back down to pure average. So in order to do that this year, we had to pull back some of the spending we have been doing. Now that we are not doing an entire end-to-end GL replacement, we're not doing an entire overhaul of our treasury management system, those are not all capitalized projects anymore. Because you're going to software as a server, there's a lot of expense in that project that comes down when you're on the other side of those. So the 0% was really bringing us back down to that peer average efficiency ratio. From here, we expect to grow in line with inflation. So if inflation is 3%, 3.5%, that's where we think we'll land for next year or the year after. And the way we think of that is 60% of our costs are in people. And so when you think about setting a raise pool, an incentive pool, medical costs, that's going to raise with inflation. So unless you can get a lot of people out of your company, you've got to let that part of your cost base run up. We have 400 branches, over 1,000 buildings. Many of them have leases that automatically increase every year. So we're not saying that we're going to increase how we invest back in the company. We're just saying our costs drift up. Where we are going to invest back in the company in the coming years, it's branches, it's bankers. We are self-funding that. The reduction in the cost of running a mortgage department is being redeployed into bankers in our regional bank and into de novos in our consumer business.

There's a question down here in the front.

Hi, Janet Leigh from TD Cowan. So you talked about outside of construction, like the field, um, Thank you. It was a wonderful day. I will answer the question. If you have the challenge, please read the chat? Thank you. Right way to. Think about it.

Yeah, I think, you know, a little bit like Rossi, it's about what does the industry have available? We are not going, as we said earlier, we're not going to outperform the industry on loan growth. We're not going to have the highest loan growth in the industry. We're going to be, you know, around that peer average, you know, GDP or GDP plus. But the question is, what's available to go get? You can grow your loans as fast as you want, but can you get the credit metrics that you want? Can you get the equity in the deal? Do you get the rate and the structure you want? And so really being disciplined about how we do that. We'll give guidance on loan growth for next year, you know, in January when we set out expectations for 2027, and hopefully by then we'll have a better idea as to how this election will change the economy. One of the big ones for our industry that as of the last 24 hours, you know, I haven't heard anything different, but you all are much more plugged in. I've been on the road with investors the last two days is we're hearing that Basel III endgame will go in by the end of the year. They're still trying to get that done. The intent of Basel III Endgame is that it frees up capital for us to increase loans and so that we can continue lending. So I think depending on where the industry is, I don't want to say it's low single digits and then something happens and the industry's at 10, right? So let us get through the next couple months, and we'll give that in our guidance. What I will say, though, is we have a balanced revenue business model. Two years ago, I stopped giving NII guidance and fee income guidance separately, and it didn't go that well originally. But now for two years, we've given an outlook for guidance with a rate curve that has been 100% different than what we thought going into the year, and somehow 100% doesn't seem high enough for what happened this year. And yet we are still in our range of revenue guidance that we gave last December when we thought we'd have three rate decreases, and instead we're probably going to have two increases. What happens, you know, if we set out at the beginning of the year, we thought we'd have more FHN financial ADR. We thought we'd have more mortgage warehouse in the books. We thought we'd have more mortgage refi. That did not happen because the rate scenario changed, but now we're getting the benefit of our asset-sensitive balance sheet pricing up towards the end of Q3 and Q4. And so whether it's low single digits or mid-single digits loan growth or that changes in the year, it doesn't change our outlook for revenue. Hey, Ryan.

Hi, Hope. Maybe on the back of your comments about FASL being finalized, another bank was talking this morning and said they didn't think they'd be able to deploy all of it because of TCE becoming more of a binding constraint. Can you maybe just talk about, obviously the focus has been on 10 to 10.5% in CET1. How do you expect to see capital ratios evolving, and do you foresee the binding constraint shifting for you guys at all? Thanks.

Yeah, we look at TCE TA. It's one of our ratios we review with our board every quarter, and we measure versus peers. I don't see that as a binding constraint for us in the near term. I don't know who said that, so I don't know if they're already so high in loan growth that it's going further. We've been pretty moderate in loan growth in the mid-single digits. For us with Basel III, one of the biggest pickups that we get is currently our FHN financial portfolio has to hold capital against it, but if you're under $5 billion in the new proposal, Supposedly, you don't. So just being able to redeploy that, whether it's loan growth or share buybacks, that's a day one impact for us immediately.

I guess maybe one more hope. Is the clock ticking for consolidation to occur in the banking industry for the next two years, maybe among the small and mid-sized banks, or is that too short-sighted of a view?

I think the clock's always ticking down to something. The question is, do we think there's going to be, you know, a door slammed shut? I'm not sure that any of us here quite know who the, you know, presidential candidates are going to be and whether we're going to see a shift in the White House in 2028, I guess it is, right? Trying to get my ears right. I think it's a concern is could we get back to an environment where you, you know, it's much harder to get a deal done, but it's not going to make you take a deal that is unfair to you as a seller or overbid on somebody to hit that. We still have a fiduciary responsibility to our shareholders to do the right financial deal, and so we sat here two years ago, and it was a red wave, and they're like, there's going to be nothing but consolidation. You know, there's going to be so many less banks. That didn't happen. And so the last two years has not seen the mass consolidation we thought. So I think the industry tends to be very rational about if you're a well-run bank, who do you buy, if you're going to sell, when, and that works really well. We were with investors recently that said, you know, every bank that goes up for sale is getting a buyer. I said, no, every bank that you hear about that's for sale is getting a buyer. There's lots of banks that have been shopped for years, but you look at the math and you're just like, who would want to buy that?

Great. So with that, I think we're out of time. Thank you, Hope.

Thank you.

Thank you, First Horizon.