First Horizon (FHN) Earnings Date & Reports

Key Takeaways

• First Horizon reported a third quarter 2026 net loss available to common shareholders of $94 million, or $0.20 per diluted share, driven by a one-time charge tied to a mortgage portfolio sale.
• Adjusted earnings per share (EPS) came in at $0.53, beating the consensus estimate of $0.52 by a penny and rising 4% from the prior-year quarter.
• The company agreed to sell roughly $4.5 billion of lower-yielding residential mortgage loans, a move expected to improve returns and free up balance sheet capacity.
• Net interest income (NII) grew $7 million from the prior quarter to $683 million, while the net interest margin (NIM) held steady at 3.48%.
• Credit quality remained solid, with the Common Equity Tier 1 (CET1) capital ratio at 10.3% and share buybacks set to resume in the fourth quarter.

Earnings Context and Why It Matters

First Horizon's third quarter report matters less for its headline loss than for the strategic repositioning behind it. The Memphis-based regional bank used the period to begin exiting a large pool of low-yielding consumer mortgages, a decision aimed at improving profitability and return on tangible common equity (ROTCE, a measure of how efficiently a bank generates earnings from shareholder capital). Investors have been watching whether First Horizon can sustain its relationship-focused banking model amid rising deposit costs and a shifting rate environment. The quarter's results, paired with the announced mortgage sale, offer a clearer picture of how management intends to fund future loan growth and lift returns in 2027.

Reported Results

For the third quarter of 2026, First Horizon reported a net loss available to common shareholders of $94 million, or a diluted loss of $0.20 per share. The loss stemmed primarily from notable items totaling $0.73 per share, or $347 million after tax, largely related to reclassifying targeted mortgage loans as held for sale ahead of a pending portfolio transaction.

Excluding those items, adjusted EPS was $0.53, down $0.01 from the second quarter of 2026 and up $0.02 from the third quarter of 2025. The adjusted result edged past the $0.52 consensus estimate, according to data compiled by MarketBeat.

Net interest income rose $7 million from the prior quarter to $683 million, helped by higher loan yields, while the net interest margin compressed 1 basis point to 3.48%. Average deposits increased $1.8 billion from the prior quarter to $68.6 billion, with new client deposits up about $1.5 billion even as higher-cost brokered certificates of deposit were reduced. Period-end loans and leases fell to $59.8 billion, a $5.5 billion decline driven mainly by the mortgage reclassification.

Adjusted ROTCE came in at 14.4%, and the CET1 capital ratio ended the quarter at 10.3%. Tangible book value per share declined 5% from the prior quarter to $13.84, reflecting the impact of the mortgage transaction.

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Market Reaction and Investor Sentiment

The market's read on First Horizon's quarter has been shaped by the mortgage sale rather than the headline loss. Because the $0.20 per-share loss was largely a non-cash, transaction-related charge, investors have focused on the adjusted $0.53 EPS beat and the long-term earnings lift management expects from redeploying the sale proceeds. Commentary from the earnings call emphasized that the transaction is expected to be about 4% accretive to EPS in 2027 and improve ROTCE by roughly 150 basis points, supporting a broadly constructive tone despite the reported loss. Sentiment heading into and around the print was also informed by the company's decision to resume share repurchases in the fourth quarter, signaling confidence in capital levels and the balance sheet.

Forward Outlook and Key Factors to Monitor

Looking ahead, investors will watch how quickly First Horizon settles the mortgage sale and redeploys the proceeds. Management expects settlement within days to a week of the report, with about two-thirds of the near-term benefit arriving in the fourth quarter of 2026 as proceeds are reinvested. The transaction is expected to lower the loan-to-deposit ratio to roughly 88% and provide immediate support to the net interest margin.

Management has said it expects NIM to improve into the 3.50% range, supported by greater asset sensitivity as the rate cycle turns higher. Deposit costs, which rose 12 basis points to 2.45% during the quarter, remain a key variable, with the bank targeting a roughly 60% deposit beta through the cycle.

Other factors worth monitoring include commercial loan growth, which rose nearly $2 billion over the past year, and credit trends. Nonperforming loans held flat at 81 basis points, and net charge-offs remained modest at 22 basis points. Expense discipline, technology and AI investments, and the pace of share buybacks will also shape the path toward the operating leverage management expects in 2027.

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