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First Horizon (FHN) Q4 Earnings & Revenues Beat, Stock Dips
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Shares of First Horizon National Corporation (FHN - Free Report) tumbled 1.1%, likely mirroring investors’ concerns over the top-line decline in the fourth quarter. Adjusted earnings per share of 48 cents beat the Zacks Consensus Estimate of 38 cents. The figure also improved 4% year over year. Results excluded after-tax impacts of 8 cents per share from notable items related to the IBERIABANK Corporation merger.
Results reflect higher deposit balance, provision benefits and improving credit quality. However, a decline in net interest income (NII) and fee income affected revenues. Also, higher expenses and pressure on margin due to low interest rates were spoilsports.
Net income available to common shareholders was $219 million, down from $234 million recorded in the prior-year quarter.
For 2021, the net income available to common shareholders was $962 million compared with the $822 million reported in 2020. Adjusted earnings per share were $2.07, up from the prior year’s $1.22 and surpassing the consensus estimate of $1.96.
Revenues & Expenses Fall, Deposits Climb
Total revenues were $745 million, down 8% year over year. Nonetheless, the top line outpaced the consensus estimate of $733.5 million.
In 2021, total revenues were down 3% from the prior-year level to $3.07 billion. Nonetheless, the reported figure met the consensus mark.
NII declined 5% year over year to $498 million. Also, the net interest margin shrunk 30 basis points (bps) to 2.42%.
Non-interest income was $247 million, declining 14% from the year-ago level.
Non-interest expenses increased 4% year over year to $528 million.
The efficiency ratio was 70.88%, up from the year-ago period’s 62.71%. A rise in the efficiency ratio indicates a decrease in profitability.
Total period-end loans and leases, net of unearned income, were $54.86 billion, down 1% from the prior quarter’s end. Total period-end deposits of $74.89 billion increased 1% from the prior quarter.
Credit Quality Improves
Non-performing loans and leases of $275 million declined 29% from the prior-year period. Further, as a percentage of period-end loans on an annualized basis, the allowance for loan losses was 1.22%, down 43 bps from the previous-year quarter.
The fourth quarter witnessed net charge-offs of $1 million, reducing from the prior-year quarter’s $29 million. Moreover, the provision for credit losses was a benefit of $65 million against expenses of $1 million in the prior-year quarter.
However, the allowance for loan and lease losses of $670 million increased 30% from the year-ago period.
Capital Position Weak
As of Dec 31, 2021, the Common Equity Tier 1 ratio was 9.9%, up from 9.7% reported at the end of the year-earlier quarter.
However, the total capital ratio was 12.4%, down from the previous-year quarter’s 12.6%. Tier 1 leverage ratio was 8.1%, down from 8.2% in the prior year.
Our Viewpoint
First Horizon benefits from an attractive geographic footprint and rising deposit balances. The company’s inorganic expansion efforts will also support financials. It remains on track to fully integrate systems related to the IBERIABANK Corporation merger in February 2022 and achieve $200 million of annualized net cost savings by fourth-quarter 2022. It achieved $104 million of annualized net cost savings in 2021.
Nevertheless, mounting expenses and near-zero interest rates remain major concerns.
First Horizon Corporation Price, Consensus and EPS Surprise
State Street’s (STT - Free Report) fourth-quarter 2021 adjusted earnings of $2.00 per share outpaced the Zacks Consensus Estimate of $1.91. STT's bottom line was 18.3% higher than the prior-year level.
State Street’s results reflected investment servicing wins, provision benefits and improvement in fee income. However, a rise in expenses, a fall in net interest revenues and lower interest rates were the undermining factors.
BOK Financial’s (BOKF - Free Report) earnings per share of $1.71 missed the Zacks Consensus Estimate of $1.81. The bottom line decreased 22.6% from the prior-year quarter.
Results were undermined by lower fees and commissions, and a decline in the loan balance. Nonetheless, lower expenses, higher net interest revenues and provision benefits were tailwinds for BOKF.
F.N.B. Corporation’s (FNB - Free Report) fourth-quarter 2021 adjusted earnings per share of 30 cents met the Zacks Consensus Estimate. FNB's bottom line reflects a rise of 7.1% from the prior-year quarter.
F.N.B. Corporation’s results were primarily aided by a rise in fee income, lower expenses and provision benefits. However, a fall in NII was the undermining factor.
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First Horizon (FHN) Q4 Earnings & Revenues Beat, Stock Dips
Shares of First Horizon National Corporation (FHN - Free Report) tumbled 1.1%, likely mirroring investors’ concerns over the top-line decline in the fourth quarter. Adjusted earnings per share of 48 cents beat the Zacks Consensus Estimate of 38 cents. The figure also improved 4% year over year. Results excluded after-tax impacts of 8 cents per share from notable items related to the IBERIABANK Corporation merger.
Results reflect higher deposit balance, provision benefits and improving credit quality. However, a decline in net interest income (NII) and fee income affected revenues. Also, higher expenses and pressure on margin due to low interest rates were spoilsports.
Net income available to common shareholders was $219 million, down from $234 million recorded in the prior-year quarter.
For 2021, the net income available to common shareholders was $962 million compared with the $822 million reported in 2020. Adjusted earnings per share were $2.07, up from the prior year’s $1.22 and surpassing the consensus estimate of $1.96.
Revenues & Expenses Fall, Deposits Climb
Total revenues were $745 million, down 8% year over year. Nonetheless, the top line outpaced the consensus estimate of $733.5 million.
In 2021, total revenues were down 3% from the prior-year level to $3.07 billion. Nonetheless, the reported figure met the consensus mark.
NII declined 5% year over year to $498 million. Also, the net interest margin shrunk 30 basis points (bps) to 2.42%.
Non-interest income was $247 million, declining 14% from the year-ago level.
Non-interest expenses increased 4% year over year to $528 million.
The efficiency ratio was 70.88%, up from the year-ago period’s 62.71%. A rise in the efficiency ratio indicates a decrease in profitability.
Total period-end loans and leases, net of unearned income, were $54.86 billion, down 1% from the prior quarter’s end. Total period-end deposits of $74.89 billion increased 1% from the prior quarter.
Credit Quality Improves
Non-performing loans and leases of $275 million declined 29% from the prior-year period. Further, as a percentage of period-end loans on an annualized basis, the allowance for loan losses was 1.22%, down 43 bps from the previous-year quarter.
The fourth quarter witnessed net charge-offs of $1 million, reducing from the prior-year quarter’s $29 million. Moreover, the provision for credit losses was a benefit of $65 million against expenses of $1 million in the prior-year quarter.
However, the allowance for loan and lease losses of $670 million increased 30% from the year-ago period.
Capital Position Weak
As of Dec 31, 2021, the Common Equity Tier 1 ratio was 9.9%, up from 9.7% reported at the end of the year-earlier quarter.
However, the total capital ratio was 12.4%, down from the previous-year quarter’s 12.6%. Tier 1 leverage ratio was 8.1%, down from 8.2% in the prior year.
Our Viewpoint
First Horizon benefits from an attractive geographic footprint and rising deposit balances. The company’s inorganic expansion efforts will also support financials. It remains on track to fully integrate systems related to the IBERIABANK Corporation merger in February 2022 and achieve $200 million of annualized net cost savings by fourth-quarter 2022. It achieved $104 million of annualized net cost savings in 2021.
Nevertheless, mounting expenses and near-zero interest rates remain major concerns.
First Horizon Corporation Price, Consensus and EPS Surprise
First Horizon Corporation price-consensus-eps-surprise-chart | First Horizon Corporation Quote
First Horizon currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
State Street’s (STT - Free Report) fourth-quarter 2021 adjusted earnings of $2.00 per share outpaced the Zacks Consensus Estimate of $1.91. STT's bottom line was 18.3% higher than the prior-year level.
State Street’s results reflected investment servicing wins, provision benefits and improvement in fee income. However, a rise in expenses, a fall in net interest revenues and lower interest rates were the undermining factors.
BOK Financial’s (BOKF - Free Report) earnings per share of $1.71 missed the Zacks Consensus Estimate of $1.81. The bottom line decreased 22.6% from the prior-year quarter.
Results were undermined by lower fees and commissions, and a decline in the loan balance. Nonetheless, lower expenses, higher net interest revenues and provision benefits were tailwinds for BOKF.
F.N.B. Corporation’s (FNB - Free Report) fourth-quarter 2021 adjusted earnings per share of 30 cents met the Zacks Consensus Estimate. FNB's bottom line reflects a rise of 7.1% from the prior-year quarter.
F.N.B. Corporation’s results were primarily aided by a rise in fee income, lower expenses and provision benefits. However, a fall in NII was the undermining factor.