First Horizon Corporation (FHN): Business Model Canvas [10-2024 Updated]

In the competitive banking landscape, First Horizon Corporation (FHN) stands out with its strategic business model that focuses on delivering comprehensive financial solutions. This post delves into the key components of FHN's business model canvas, highlighting essential elements such as key partnerships, value propositions, and revenue streams. Discover how First Horizon effectively meets the diverse needs of its customer segments and maintains a strong market presence across the southern United States.

First Horizon Corporation (FHN) - Business Model: Key Partnerships

Collaborations with local businesses and financial institutions

First Horizon Corporation (FHN) has established strong collaborations with local businesses and financial institutions to enhance its service offerings and expand its market reach. As of June 30, 2024, FHN reported period-end loans and leases of $62.8 billion, which reflects a 2% increase from December 31, 2023, driven by commercial loan growth, particularly loans to mortgage companies and commercial real estate (CRE) loans.

FHN's regional banking segment, which is crucial for local partnerships, generated net interest income of $1.054 billion for the first half of 2024. This segment is vital in providing tailored financial solutions to local businesses.

Partnerships with government agencies for loan programs

FHN actively partners with government agencies to facilitate various loan programs aimed at supporting community development and small businesses. These partnerships are instrumental in providing access to capital for underserved markets. For instance, as of June 30, 2024, FHN reported having $2.9 billion in loans to mortgage companies, which includes participation in government-backed loan programs.

Moreover, the company’s provision for credit losses was $105 million for the first half of 2024, reflecting its commitment to risk management while supporting these initiatives.

Relationships with mortgage companies for secondary market sales

FHN maintains significant relationships with mortgage companies to facilitate secondary market sales. In the first half of 2024, FHN originated mortgage loans for sale into the secondary market, with total mortgage loan activity amounting to $485 million in originations. The company reported a net balance of $111 million in residential mortgage loans held for sale as of June 30, 2024.

These relationships not only support FHN's revenue streams but also enhance its liquidity position by allowing it to efficiently manage its mortgage portfolio. The mortgage banking income for FHN was $10 million for the second quarter of 2024, showcasing the effectiveness of these partnerships.

Partnership Type	Details	Financial Impact (H1 2024)
Local Businesses & Financial Institutions	Collaborations to enhance service offerings	Net Interest Income: $1.054 billion
Government Agencies	Facilitating community development loan programs	Loans to Mortgage Companies: $2.9 billion
Mortgage Companies	Secondary market sales for residential mortgages	Mortgage Loan Originations: $485 million

First Horizon Corporation (FHN) - Business Model: Key Activities

Providing a range of banking services, including loans and deposits

As of June 30, 2024, First Horizon Corporation (FHN) reported total period-end loans and leases of $62.8 billion, which reflects a growth of $1.5 billion, or 2%, from December 31, 2023. The composition of these loans includes:

Loan Type	Amount (in billions)	Percentage of Total
Commercial Loans	33.5	53%
Commercial Real Estate	14.7	24%
Consumer Real Estate	13.9	22%
Credit Card and Other Loans	0.8	1%

In addition, FHN's total deposits as of June 30, 2024, were $64.8 billion, a decrease of $986 million compared to December 31, 2023. The breakdown of deposits includes:

Type of Deposit	Amount (in billions)	Percentage of Total
Interest-Bearing Deposits	48.5	75%
Noninterest-Bearing Deposits	16.3	25%

Mortgage origination and servicing

FHN's mortgage banking operations include the origination and servicing of residential first lien mortgages. As of June 30, 2024, the company reported mortgage banking income of $19 million, an increase of $8 million from the same period in the previous year, driven by higher origination volume and improvement in gain-on-sale spreads. The total loans held for sale were $471 million, slightly down from $502 million at the end of 2023.

Risk management and compliance with financial regulations

FHN maintains a robust risk management framework to comply with financial regulations. The allowance for loan and lease losses (ALLL) was reported at $821 million as of June 30, 2024, up from $773 million at the end of 2023, reflecting an evolving macroeconomic outlook and increased commercial loan balances. The ALLL to total loans and leases ratio was 1.31%, indicating a proactive approach to managing credit risk.

The Tier 1 risk-based capital ratio as of June 30, 2024, was 12.05%, down from 12.42% at the end of the previous year, while the total risk-based capital ratio was 13.67%, compared to 13.96%.

First Horizon Corporation (FHN) - Business Model: Key Resources

Strong capital base and liquidity position

As of June 30, 2024, First Horizon Corporation reported total assets of $82.2 billion, a slight increase from $81.7 billion at the end of 2023. The company maintained a Tier 1 risk-based capital ratio of 12.05% and total risk-based capital ratio of 13.67%, down from 12.42% and 13.96% respectively at December 31, 2023. The Common Equity Tier 1 (CET1) ratio was recorded at 11.05%.

Period-end deposits were $64.8 billion, reflecting a decrease of $986 million from December 31, 2023. The allowance for loan and lease losses (ALLL) was reported at $821 million as of June 30, 2024, compared to $773 million at the end of 2023.

Diverse loan portfolio across various sectors

First Horizon Corporation's loan and lease portfolio was $62.8 billion as of June 30, 2024, marking a 2% increase from $61.3 billion as of December 31, 2023. The composition of the loan portfolio is as follows:

Loan Type	June 30, 2024 (in millions)	December 31, 2023 (in millions)	Growth Rate
Commercial, Financial, and Industrial	$33,452	$32,633	3%
Commercial Real Estate	$14,669	$14,216	3%
Consumer Real Estate	$13,909	$13,650	2%
Credit Card and Other	$751	$793	-5%
Total Loans and Leases	$62,781	$61,292	2%

This diversified portfolio includes significant exposure to both commercial and consumer segments, with commercial loans making up approximately 53% of the total.

Skilled workforce with expertise in banking and financial services

First Horizon Corporation employs approximately 7,300 associates across more than 450 business locations. The company reported personnel expenses of $279 million in Q2 2024, reflecting a 7% decrease from $301 million in Q2 2023. The expertise of the workforce is critical in maintaining service quality and operational efficiency in a competitive banking environment.

In terms of performance, FHN's net income available to common shareholders was $184 million for the second quarter of 2024, equating to $0.34 per diluted share. The strategic focus on skilled personnel and effective management has enabled the company to navigate the complexities of the financial services sector successfully.

First Horizon Corporation (FHN) - Business Model: Value Propositions

Comprehensive financial solutions tailored for individuals and businesses

First Horizon Corporation (FHN) offers a broad range of financial products and services designed to meet the diverse needs of both individual customers and businesses. As of June 30, 2024, FHN reported total loans and leases of $62.8 billion, a 2% increase from December 31, 2023, highlighting their commitment to providing accessible lending options. This growth was primarily driven by a $1.3 billion increase in commercial loans, particularly in loans to mortgage companies and commercial real estate (CRE) loans.

Commitment to community development and support

FHN emphasizes community development through various initiatives, including substantial contributions to local foundations. In 2023, FHN made a notable contribution of $50 million to the First Horizon Foundation, aiding economic development and community support. This commitment is reflected in their operational strategy, where they aim to foster economic growth and provide resources to underserved communities.

Competitive interest rates and personalized customer service

FHN remains competitive in the banking sector by offering attractive interest rates on loans and deposits. The net interest margin was reported at 3.38% as of June 30, 2024. The corporation also prioritizes personalized customer service, with a focus on understanding the unique needs of each customer. This approach is evident in their customer satisfaction ratings, which contribute to fostering long-term relationships and loyalty among clients.

Financial Metrics	Q2 2024	Q2 2023	Change (%)
Net Income Available to Common Shareholders	$184 million	$317 million	-42%
Diluted Earnings per Share	$0.34	$0.56	-39%
Net Interest Income	$629 million	$630 million	-0.16%
Provision for Credit Losses	$55 million	$50 million	10%
Period-End Total Loans and Leases	$62.8 billion	$61.3 billion	2%

First Horizon Corporation (FHN) - Business Model: Customer Relationships

Dedicated relationship managers for personalized service

First Horizon Corporation (FHN) employs dedicated relationship managers to foster personalized connections with clients. This approach is particularly evident in their commercial banking sector, where relationship managers are tasked with understanding client needs and providing tailored solutions. As of June 30, 2024, FHN reported a total of approximately 7,300 associates, many of whom are involved in direct client engagement.

Customer engagement through digital channels and branches

FHN actively engages customers through a combination of digital platforms and physical branches. The bank operates over 450 business locations across 24 states, with more than 400 banking centers in 12 states. Digital engagement has been a focal point, with significant investments in online and mobile banking services to facilitate customer interactions. For instance, as of June 30, 2024, the bank's noninterest income from card and digital banking fees was reported at $20 million for the second quarter.

Loyalty programs and incentives for long-term customers

FHN implements loyalty programs aimed at enhancing customer retention and satisfaction. These programs often include incentives such as reduced fees, higher interest rates on deposits, and rewards for maintaining certain account balances. The bank's focus on long-term customer relationships is reflected in their overall strategy, which aims to create value through consistent engagement and tailored financial solutions. As part of their customer loyalty efforts, FHN reported a significant portion of their deposits, approximately $64.8 billion, as of June 30, 2024, indicating a stable base of long-term customers.

Customer Engagement Metrics	As of June 30, 2024	As of December 31, 2023
Total Employees	7,300	7,300
Banking Centers	400+	400+
Total Deposits	$64.8 billion	$65.8 billion
Card and Digital Banking Fees	$20 million	$20 million

First Horizon Corporation (FHN) - Business Model: Channels

Branch network across the southern United States

As of June 30, 2024, First Horizon Corporation operates over 450 business locations across 24 states, including more than 400 banking centers in 12 states. The company employs approximately 7,300 associates, which enhances its customer service capabilities within its branch network.

State	Number of Banking Centers	Percentage of Total Banking Centers
Tennessee	200	50%
North Carolina	75	18.75%
Florida	50	12.5%
Louisiana	30	7.5%
Mississippi	20	5%
Other States	25	6.25%

Digital banking platforms for online transactions

First Horizon has invested significantly in its digital banking platforms, which facilitate online transactions for customers. The bank reported that as of June 30, 2024, digital transactions accounted for approximately 65% of total transactions processed. This shift towards digital banking is in response to the growing demand for online services.

Mobile banking applications for customer convenience

The mobile banking application of First Horizon allows customers to perform various banking operations conveniently. As of June 30, 2024, the mobile app had over 1.5 million downloads, with an average user satisfaction rating of 4.5 out of 5 stars across major app stores. Features include mobile check deposits, fund transfers, and account management.

Feature	Number of Users	User Satisfaction Rating
Mobile Check Deposit	650,000	4.6
Funds Transfer	500,000	4.5
Account Management	800,000	4.4

First Horizon Corporation (FHN) - Business Model: Customer Segments

Individual consumers seeking personal banking solutions

First Horizon Corporation offers a range of personal banking services tailored to individual consumers. As of June 30, 2024, the consumer real estate loan portfolio totaled approximately $13.9 billion, which includes home equity lines of credit (HELOC) and real estate installment loans. The company reported a total of $751 million in credit card and other consumer loans. Furthermore, the bank's deposits from individual consumers amounted to $64.8 billion, with noninterest-bearing deposits making up 25% of this total.

Small to medium-sized enterprises (SMEs) for commercial banking

First Horizon's commercial banking services cater to small and medium-sized enterprises (SMEs), providing them with essential financial products. As of June 30, 2024, total commercial loans stood at $48.1 billion, which includes $33.5 billion in commercial and industrial loans and $14.7 billion in commercial real estate loans. The bank's focus on SMEs is evidenced by the provision for credit losses, which was $105 million for the first half of 2024, indicating a commitment to managing risk within this segment.

Residential and commercial real estate borrowers

First Horizon serves both residential and commercial real estate borrowers, providing various mortgage products. The company reported a significant increase in loans to mortgage companies, totaling $2.9 billion. The residential real estate loan portfolio, including HELOCs, represented a substantial portion of the consumer loans, underlining the bank's focus on the housing market. The total nonperforming loans and leases related to consumer real estate stood at 1.03% as of June 30, 2024, reflecting the bank's management of credit quality in this segment.

Customer Segment	Total Loans (as of June 30, 2024)	Deposit Amount (as of June 30, 2024)	Provision for Credit Losses (2024)
Individual Consumers	$13.9 billion (Consumer Real Estate)	$64.8 billion	$105 million
Small to Medium-sized Enterprises (SMEs)	$48.1 billion (Commercial Loans)	N/A	$105 million
Residential and Commercial Real Estate Borrowers	$2.9 billion (Loans to Mortgage Companies)	N/A	N/A

First Horizon Corporation (FHN) - Business Model: Cost Structure

Operational costs related to branch maintenance and staffing

As of June 30, 2024, First Horizon Corporation reported total noninterest expense of $500 million for the second quarter, which represents a decrease of $15 million from the previous quarter. This expense includes various operational costs associated with branch maintenance and staffing.

The breakdown of noninterest expenses reveals:

Expense Category	Amount (in millions)
Personnel Expense	$279
Net Occupancy Expense	$31
Computer Software	$29
Operations Services	$23
Legal and Professional Fees	$18
Deposit Insurance Expense	$16
Advertising and Public Relations	$14
Other Expenses	$90
Total Noninterest Expense	$500

Marketing and advertising expenses to attract new customers

Marketing and advertising expenses for the second quarter of 2024 amounted to $14 million, reflecting an increase of $6 million compared to the previous quarter. This increase is largely attributed to new marketing campaigns aimed at enhancing customer acquisition and retention.

In comparison with the second quarter of 2023, advertising and public relations expenses decreased by $3 million, which was primarily due to strategic timing differences in various campaigns.

Compliance and regulatory costs associated with banking operations

Compliance and regulatory costs have been a significant aspect of First Horizon's operational structure. For the first half of 2024, the provision for credit losses was recorded at $105 million, which indicates an increase from the previous year. This provision reflects the bank's commitment to maintaining adequate reserves to cover potential losses associated with regulatory requirements.

Additionally, the company incurred $12 million in FDIC special assessments as part of its compliance costs, which are included in the noninterest expense category.

The ongoing adjustments to regulatory frameworks necessitate continuous investment in compliance, which is crucial for maintaining operational integrity within the banking sector.

First Horizon Corporation (FHN) - Business Model: Revenue Streams

Net interest income from loans and deposits

For the six months ended June 30, 2024, First Horizon Corporation reported a total net interest income of $1.253 billion, which represents a decrease of $65 million compared to the same period in 2023. The net interest income was segmented as follows:

Segment	Net Interest Income (in millions)
Regional Banking	$1,054
Specialty Banking	$310
Corporate	$(111)
Total	$1,253

The decline in net interest income was primarily driven by higher funding costs, despite a favorable increase in earning asset yields and loan growth during this period.

Noninterest income from fees and service charges

First Horizon's noninterest income for the first half of 2024 totaled $381 million, a decrease of $190 million, or 33%, compared to the same period in 2023. The breakdown of noninterest income by major product lines is as follows:

Noninterest Income Component	Amount (in millions)
Deposit transactions and cash management	$88
Fixed income	$92
Brokerage, management fees and commissions	$49
Card and digital banking fees	$38
Other service charges and fees	$27
Trust services and investment management	$24
Mortgage banking income	$19
Securities gains (losses), net	$1
Other income	$43
Total Noninterest Income	$381

The decrease was largely attributed to the absence of the $225 million gain on merger termination recognized in 2023, though partially offset by higher fixed income and mortgage banking income.

Income from mortgage banking activities, including loan sales

In the second quarter of 2024, First Horizon reported mortgage banking income of $10 million, which marked an increase of $1 million from the previous quarter, driven by higher origination volumes during the spring home-buying season.

For the six months ended June 30, 2024, mortgage banking income totaled $19 million, representing an increase of $8 million compared to the same period in 2023.