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FHN Shares Fall Despite Q2 Earnings Beat on Higher NII & Fee Income
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Key Takeaways
First Horizon posted Q2'26 EPS of 54 cents, beating estimates, but shares fell nearly 3%.
First Horizon benefited from higher NII, stronger fee income, loan growth and deposit growth.
NII rose 5% and fee income climbed 12% year over year, while expenses increased 8%.
First Horizon Corporation (FHN - Free Report) posted second-quarter 2026 earnings per share (EPS) of 54 cents, surpassing the Zacks Consensus Estimate of 52 cents. This compares favorably with 45 cents in the year-ago quarter.
Results benefited from higher net interest income (NII) and non-interest income, along with a lower provision for credit losses. Higher loan and deposit balances also provided support. However, rising expenses and weaker capital ratios were headwinds. Given these concerns, FHN shares lost nearly 3% in yesterday’s trading session.
Net income available to its common shareholders was $260 million, up 12% year over year.
FHN’s Revenues & Expenses Rise
Total quarterly revenues were $887 million, which increased 7% year over year. The top line surpassed the Zacks Consensus Estimate of $873.5 million.
NII increased 5% year over year to $676 million. Additionally, the net interest margin expanded 9 basis points from the prior-year quarter to 3.49%.
Non-interest income was $211 million, rising 12% year over year. The increase reflected growth in brokerage, trust and insurance income, fixed income revenues, mortgage banking revenues and deferred compensation income.
Non-interest expenses increased 8% year over year to $531 million. The rise was mainly due to higher salaries and benefits, outside services, occupancy and equipment, and deferred compensation expenses.
The efficiency ratio was 59.88%, up from 59.20% in the same quarter last year. A rise in the efficiency ratio indicates lower profitability.
FHN’s Q2 Segment Results
Commercial, Consumer and Wealth revenues were $777 million, up 3% year over year. The segment’s net income increased 3% to $304 million.
Wholesale revenues rose 13% year over year to $125 million. However, the segment’s net income declined 22% to $18 million.
Corporate revenues were negative $15 million compared with negative $38 million in the prior-year quarter. The segment reported a net loss of $48 million, narrower than the year-ago loss of $75 million.
FHN’s Loans & Deposits Balances Increase
Total period-end loans and leases, net of unearned income, were $65.3 billion, up 1.5% from the end of the prior quarter. Total period-end deposits were $68.1 billion, increasing 2.4% sequentially.
FHN’s Credit Quality Improves
Non-performing loans and leases totaled roughly $531 million, down from $593 million in the prior-year quarter. The non-performing loans and leases ratio declined to 0.81% from 0.94%.
The allowance for credit losses to loans and leases ratio was 1.24%, down from 1.42% in the year-ago quarter.
Net charge-offs were $33 million, down 3% year over year. Provision for credit losses was $15 million compared with $30 million in the year-ago quarter.
FHN’s Capital Ratios Deteriorate
As of June 30, 2026, the common equity tier 1 ratio was 10.5%, down from 11% reported at the end of the year-ago quarter.
The total capital ratio was 13.4%, down from 14% a year ago. The tier 1 leverage ratio declined slightly to 10.5% from 10.6% in the prior-year quarter.
FHN’s Capital Deployment
During the quarter, FHN repurchased $100 million worth of shares at an average price of $24.52 per share. The company had $665 million remaining under its share repurchase authorization.
Our Viewpoint on FHN
First Horizon benefited from higher net interest income, solid non-interest income growth, loan and deposit growth, and improved credit quality. However, rising expenses, a higher efficiency ratio and lower capital ratios remain areas to watch going forward.
First Horizon Corporation Price, Consensus and EPS Surprise
Regions Financial (RF - Free Report) is scheduled to release second-quarter 2026 earnings on July 17.
The consensus estimate for RF’s quarterly earnings has remained unchanged at 64 cents per share over the past seven days. This indicates a 6.7% increase from the year-ago reported level.
Truist Financial (TFC - Free Report) is slated to report second-quarter 2026 results on July 17.
Over the past seven days, the Zacks Consensus Estimate for TFC’s quarterly earnings has remained unchanged at $1.08 per share. This indicates an 18.7% increase from the year-ago reported level.
View the Zacks #1 Rank List
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FHN Shares Fall Despite Q2 Earnings Beat on Higher NII & Fee Income
Key Takeaways
First Horizon Corporation (FHN - Free Report) posted second-quarter 2026 earnings per share (EPS) of 54 cents, surpassing the Zacks Consensus Estimate of 52 cents. This compares favorably with 45 cents in the year-ago quarter.
Results benefited from higher net interest income (NII) and non-interest income, along with a lower provision for credit losses. Higher loan and deposit balances also provided support. However, rising expenses and weaker capital ratios were headwinds. Given these concerns, FHN shares lost nearly 3% in yesterday’s trading session.
Net income available to its common shareholders was $260 million, up 12% year over year.
FHN’s Revenues & Expenses Rise
Total quarterly revenues were $887 million, which increased 7% year over year. The top line surpassed the Zacks Consensus Estimate of $873.5 million.
NII increased 5% year over year to $676 million. Additionally, the net interest margin expanded 9 basis points from the prior-year quarter to 3.49%.
Non-interest income was $211 million, rising 12% year over year. The increase reflected growth in brokerage, trust and insurance income, fixed income revenues, mortgage banking revenues and deferred compensation income.
Non-interest expenses increased 8% year over year to $531 million. The rise was mainly due to higher salaries and benefits, outside services, occupancy and equipment, and deferred compensation expenses.
The efficiency ratio was 59.88%, up from 59.20% in the same quarter last year. A rise in the efficiency ratio indicates lower profitability.
FHN’s Q2 Segment Results
Commercial, Consumer and Wealth revenues were $777 million, up 3% year over year. The segment’s net income increased 3% to $304 million.
Wholesale revenues rose 13% year over year to $125 million. However, the segment’s net income declined 22% to $18 million.
Corporate revenues were negative $15 million compared with negative $38 million in the prior-year quarter. The segment reported a net loss of $48 million, narrower than the year-ago loss of $75 million.
FHN’s Loans & Deposits Balances Increase
Total period-end loans and leases, net of unearned income, were $65.3 billion, up 1.5% from the end of the prior quarter. Total period-end deposits were $68.1 billion, increasing 2.4% sequentially.
FHN’s Credit Quality Improves
Non-performing loans and leases totaled roughly $531 million, down from $593 million in the prior-year quarter. The non-performing loans and leases ratio declined to 0.81% from 0.94%.
The allowance for credit losses to loans and leases ratio was 1.24%, down from 1.42% in the year-ago quarter.
Net charge-offs were $33 million, down 3% year over year. Provision for credit losses was $15 million compared with $30 million in the year-ago quarter.
FHN’s Capital Ratios Deteriorate
As of June 30, 2026, the common equity tier 1 ratio was 10.5%, down from 11% reported at the end of the year-ago quarter.
The total capital ratio was 13.4%, down from 14% a year ago. The tier 1 leverage ratio declined slightly to 10.5% from 10.6% in the prior-year quarter.
FHN’s Capital Deployment
During the quarter, FHN repurchased $100 million worth of shares at an average price of $24.52 per share. The company had $665 million remaining under its share repurchase authorization.
Our Viewpoint on FHN
First Horizon benefited from higher net interest income, solid non-interest income growth, loan and deposit growth, and improved credit quality. However, rising expenses, a higher efficiency ratio and lower capital ratios remain areas to watch going forward.
First Horizon Corporation Price, Consensus and EPS Surprise
First Horizon Corporation price-consensus-eps-surprise-chart | First Horizon Corporation Quote
FHN currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Other Stocks
Regions Financial (RF - Free Report) is scheduled to release second-quarter 2026 earnings on July 17.
The consensus estimate for RF’s quarterly earnings has remained unchanged at 64 cents per share over the past seven days. This indicates a 6.7% increase from the year-ago reported level.
Truist Financial (TFC - Free Report) is slated to report second-quarter 2026 results on July 17.
Over the past seven days, the Zacks Consensus Estimate for TFC’s quarterly earnings has remained unchanged at $1.08 per share. This indicates an 18.7% increase from the year-ago reported level.