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First Horizon Stock Rises Nearly 9% in 6 Months: Is It Worth Buying Now?
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Key Takeaways
FHN shares gained 8.8% in six months, outpacing industry growth but trailing the S&P 500 rally.
Strong loan growth, Fed rate cuts and liquidity support NII and capital distributions for FHN.
Rising expenses and heavy commercial loan exposure pose near-term challenges to FHN's margins.
First Horizon Corporation’s (FHN - Free Report) shares have gained 8.8% in the past six months compared with the industry’s growth of 1.5%. During the same timeframe, the S&P 500 Index has rallied 19.7%. Meanwhile, the company’s peers, Texas Capital Bancshares, Inc. (TCBI - Free Report) and BOK Financial Corporation (BOKF - Free Report) , gained 15.3% and 9.9%, respectively, in the same period.
Price Performance
Image Source: Zacks Investment Research
Factors Supporting FHN Stock
Steady Loan and Deposit Growth: The company has maintained healthy loan growth over time. Its loans and leases recorded a five-year (2019–2024) compound annual growth rate (CAGR) of 15%, driven by strategic acquisitions and the strength of a well-diversified loan portfolio. In the first nine months of 2025, loans increased year over year, supported by growth in the commercial and industrial segments and stable mortgage lending activity.
Although deposits declined during the same period, management expects balances to stabilize, aided by growth in promotional and noninterest-bearing deposits and strong customer retention. With a balanced business mix across regional and specialty banking franchises in attractive, high-growth markets, FHN remains well-positioned to achieve steady loan and deposit growth going forward.
Fed Rate Cuts to Aid NII Growth: FHN’s net interest income (on an FTE basis) recorded a five-year CAGR of 15.7% through 2024, with the upward trend persisting in the first nine months of 2025. The Fed has reduced interest rates twice in 2025 to 3.75-4%, following a 100 basis points cut in 2024. Hence, with the stabilizing funding costs and improving loan demand, NII is expected to improve further. The company’s strong presence in high-growth markets enables it to gather lower-cost core deposits, while its asset-sensitive balance sheet, with substantial floating-rate exposure, positions it well to benefit as rates stabilize.
Decent Liquidity Supports Capital Distributions: As of Sept. 30, 2025, the company held $2.1 billion in cash and interest-bearing deposits. Short-term borrowings stood at $4.3 billion, and long-term borrowings were $1.3 billion. FHN’s long-term issuer ratings of Baa3 (Moody’s) and BBB (Fitch) reflect an investment-grade profile, ensuring continued access to debt markets at favorable terms. This indicates that FHN remains financially resilient and capable of meeting its debt obligations even in a volatile macroeconomic environment.
Reflecting its sound capital position and earnings stability, First Horizon has maintained consistent shareholder returns. It announced a 7% dividend hike to 15 cents per share in January 2020 and has sustained that level since then. Its dividend yield currently stands at 2.75%, higher than the industry average of 0.90%.
Additionally, the company also authorized a $1 billion share repurchase program in October 2024, set to expire on Jan. 31, 2026. As of Sept. 30, 2025, approximately $321 million worth of shares remain available under the authorization. These shareholder-friendly actions, backed by decent liquidity and capital strength, reinforce management’s confidence in future performance and are likely to support investor sentiment.
Near-Term Hurdles for FHN
Elevated Expense Base: The company’s rising expenses remain a key concern. Non-interest expenses expanded at a five-year (2019–2024) CAGR of 10.6%, primarily driven by higher personnel and technology costs. The upward trend continued in the first nine months of 2025, reflecting ongoing investments in talent and operational enhancements. While management continues to emphasize expense control, sustained spending on digital initiatives and compliance infrastructure is likely to keep costs elevated in the near term, potentially weighing on margins.
Expense Trend
Image Source: Zacks Investment Research
Loan Concentration Risk: As of September 2025, commercial and commercial real estate loans accounted for more than 76% of total loans, exposing FHN to sector-specific risk. Moreover, the asset quality of the loan category has deteriorated. Thus, the lack of loan portfolio diversification is likely to hurt the company’s financials if the economic situation worsens.
FHN's Estimates and Valuation Analysis
The Zacks Consensus Estimate for FHN’s 2025 and 2026 sales suggests a year-over-year increase of 5.6% and 3.2%, respectively. Similarly, the consensus mark for earnings indicates an 18.1% and 6.8% rise for 2025 and 2026, respectively.
Over the past month, the Zacks Consensus Estimate for 2025 and 2026 earnings has been revised upward. This reflects analysts' positive sentiment toward long-term growth potential, indicating encouraging prospects.
Estimates Revision Trend
Image Source: Zacks Investment Research
In terms of valuation, FHN stock appears inexpensive relative to the industry. The company is currently trading at a 12-month trailing price-to-earnings (P/E) ratio of 11.28X, which is lower than the industry’s 12.6X.
Price-to-Earnings F12 M
Image Source: Zacks Investment Research
Meanwhile, Texas Capital holds a P/E ratio of 12.49X, while BOK Financial’s P/E ratio stands at 12.35X.
How to Approach FHN Stock Now?
First Horizon faces near-term headwinds from elevated non-interest expenses, commercial loan concentration, and lingering credit-quality concerns, which may constrain margin expansion. Nevertheless, the bank is poised to benefit from stable NII growth, improving funding conditions following Fed rate cuts and continued expansion across its regional and specialty banking segments.
With healthy liquidity, robust capital ratios, and a sustainable capital distribution policy, the company’s fundamentals remain strong enough to navigate macro challenges and deliver long-term shareholder value.
Hence, investors may consider FHN stock at its current levels, given its potential upside to generate steady long-term returns.
Image: Shutterstock
First Horizon Stock Rises Nearly 9% in 6 Months: Is It Worth Buying Now?
Key Takeaways
First Horizon Corporation’s (FHN - Free Report) shares have gained 8.8% in the past six months compared with the industry’s growth of 1.5%. During the same timeframe, the S&P 500 Index has rallied 19.7%. Meanwhile, the company’s peers, Texas Capital Bancshares, Inc. (TCBI - Free Report) and BOK Financial Corporation (BOKF - Free Report) , gained 15.3% and 9.9%, respectively, in the same period.
Price Performance
Image Source: Zacks Investment Research
Factors Supporting FHN Stock
Steady Loan and Deposit Growth: The company has maintained healthy loan growth over time. Its loans and leases recorded a five-year (2019–2024) compound annual growth rate (CAGR) of 15%, driven by strategic acquisitions and the strength of a well-diversified loan portfolio. In the first nine months of 2025, loans increased year over year, supported by growth in the commercial and industrial segments and stable mortgage lending activity.
Although deposits declined during the same period, management expects balances to stabilize, aided by growth in promotional and noninterest-bearing deposits and strong customer retention. With a balanced business mix across regional and specialty banking franchises in attractive, high-growth markets, FHN remains well-positioned to achieve steady loan and deposit growth going forward.
Fed Rate Cuts to Aid NII Growth: FHN’s net interest income (on an FTE basis) recorded a five-year CAGR of 15.7% through 2024, with the upward trend persisting in the first nine months of 2025. The Fed has reduced interest rates twice in 2025 to 3.75-4%, following a 100 basis points cut in 2024. Hence, with the stabilizing funding costs and improving loan demand, NII is expected to improve further. The company’s strong presence in high-growth markets enables it to gather lower-cost core deposits, while its asset-sensitive balance sheet, with substantial floating-rate exposure, positions it well to benefit as rates stabilize.
Decent Liquidity Supports Capital Distributions: As of Sept. 30, 2025, the company held $2.1 billion in cash and interest-bearing deposits. Short-term borrowings stood at $4.3 billion, and long-term borrowings were $1.3 billion. FHN’s long-term issuer ratings of Baa3 (Moody’s) and BBB (Fitch) reflect an investment-grade profile, ensuring continued access to debt markets at favorable terms. This indicates that FHN remains financially resilient and capable of meeting its debt obligations even in a volatile macroeconomic environment.
Reflecting its sound capital position and earnings stability, First Horizon has maintained consistent shareholder returns. It announced a 7% dividend hike to 15 cents per share in January 2020 and has sustained that level since then. Its dividend yield currently stands at 2.75%, higher than the industry average of 0.90%.
Additionally, the company also authorized a $1 billion share repurchase program in October 2024, set to expire on Jan. 31, 2026. As of Sept. 30, 2025, approximately $321 million worth of shares remain available under the authorization. These shareholder-friendly actions, backed by decent liquidity and capital strength, reinforce management’s confidence in future performance and are likely to support investor sentiment.
Near-Term Hurdles for FHN
Elevated Expense Base: The company’s rising expenses remain a key concern. Non-interest expenses expanded at a five-year (2019–2024) CAGR of 10.6%, primarily driven by higher personnel and technology costs. The upward trend continued in the first nine months of 2025, reflecting ongoing investments in talent and operational enhancements. While management continues to emphasize expense control, sustained spending on digital initiatives and compliance infrastructure is likely to keep costs elevated in the near term, potentially weighing on margins.
Expense Trend
Image Source: Zacks Investment Research
Loan Concentration Risk: As of September 2025, commercial and commercial real estate loans accounted for more than 76% of total loans, exposing FHN to sector-specific risk. Moreover, the asset quality of the loan category has deteriorated. Thus, the lack of loan portfolio diversification is likely to hurt the company’s financials if the economic situation worsens.
FHN's Estimates and Valuation Analysis
The Zacks Consensus Estimate for FHN’s 2025 and 2026 sales suggests a year-over-year increase of 5.6% and 3.2%, respectively. Similarly, the consensus mark for earnings indicates an 18.1% and 6.8% rise for 2025 and 2026, respectively.
Over the past month, the Zacks Consensus Estimate for 2025 and 2026 earnings has been revised upward. This reflects analysts' positive sentiment toward long-term growth potential, indicating encouraging prospects.
Estimates Revision Trend
Image Source: Zacks Investment Research
In terms of valuation, FHN stock appears inexpensive relative to the industry. The company is currently trading at a 12-month trailing price-to-earnings (P/E) ratio of 11.28X, which is lower than the industry’s 12.6X.
Price-to-Earnings F12 M
Image Source: Zacks Investment Research
Meanwhile, Texas Capital holds a P/E ratio of 12.49X, while BOK Financial’s P/E ratio stands at 12.35X.
How to Approach FHN Stock Now?
First Horizon faces near-term headwinds from elevated non-interest expenses, commercial loan concentration, and lingering credit-quality concerns, which may constrain margin expansion. Nevertheless, the bank is poised to benefit from stable NII growth, improving funding conditions following Fed rate cuts and continued expansion across its regional and specialty banking segments.
With healthy liquidity, robust capital ratios, and a sustainable capital distribution policy, the company’s fundamentals remain strong enough to navigate macro challenges and deliver long-term shareholder value.
Hence, investors may consider FHN stock at its current levels, given its potential upside to generate steady long-term returns.
The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.