First Horizon Corporation (FHN) Earnings & Analysis

Latest quarter

First Horizon reported Q3 FY2026 revenue of $781.0 million, down from $1.3 billion a year earlier. On the basis used for the consensus comparison, revenue was $880.0 million, below the $889.3 million estimate. Adjusted earnings per share on that basis were $0.53, matching the consensus.

First Horizon reported a diluted loss per share of −$0.20, compared with earnings of $0.50 a year earlier. Its operating margin was −12.0%, compared with 26.6% a year earlier, while gross margin declined to 52.5% from 68.8%.

For context on the preceding quarter, First Horizon’s filing attributed year-over-year growth in second-quarter net interest income largely to lower funding costs and loan growth, partly offset by lower loan yields. The filing also attributed higher noninterest income partly to fixed income, brokerage and management fees, while personnel costs contributed to higher noninterest expense.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On First Horizon’s second-quarter call, CFO Hope Dmuchowski said new loan commitments rose more than 50% from a year earlier, driven by commercial real estate activity. She said those commitments could support flat to slightly higher commercial real estate balances as construction projects draw on their loans. Commercial loan spreads remained generally consistent with prior quarters amid competition for lending, she said.

Dmuchowski said period-end deposits increased by $1.6 billion from the prior quarter, primarily through brokered deposits. The average rate paid on interest-bearing deposits rose to 2.33%, which she attributed to competition and the portfolio mix. Asked about deposit costs for the rest of the year, she said their path would depend on the direction of interest rates, though she expected costs to continue increasing in a pattern consistent with the prior year.

The CFO said net interest margin compressed from the prior quarter as the rate environment evolved, while loan growth helped net interest income increase. She said First Horizon’s goal was to grow customer deposits to fund loans, but that the economic and rate outlook made the future level of brokered deposits difficult to know.

Dmuchowski attributed a sequential decline in fixed-income revenue to lower average daily revenue, citing macroeconomic volatility, geopolitical changes and interest-rate uncertainty. She said higher brokerage, trust and insurance income partly offset that decline. On wealth management, she said the company had hired advisers and was working to offer wealth services to existing commercial clients.

Chief Credit Officer Thomas Hung attributed the decline in the credit loss allowance ratio to portfolio credit quality, loan resolutions and the economic outlook. Asked where the allowance might go, he declined to speculate, citing external factors including unemployment, interest rates and consumer spending power. Dmuchowski said loan growth was the priority for capital allocation, followed by dividends and share repurchases.

Guidance

On the second-quarter call, CFO Hope Dmuchowski said First Horizon continued to reiterate its full-year expectations as outlined in its presentation, while noting that the macroeconomic environment and competition could change.