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First Horizon (FHN) Q1 Earnings Meet, Revenues Beat, Stock Up

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Shares of First Horizon National Corporation (FHN - Free Report) have gained 2.9% post first-quarter earnings release. The company reported first-quarter 2019 adjusted earnings per share of 35 cents, in line with the Zacks Consensus Estimate. Further, the reported figure comes in 2.9% higher than the year-ago tally.

Results benefited from higher non-interest income and lower expenses. In addition, the efficiency ratio contracted during the Jan-Mar quarter, indicating increased profitability. However, lower net interest income, rise in net charge-offs and provision for loan losses were the key undermining factors.

After considering certain non-recurring items, net income available to common shareholders for the quarter came in at $99 million, up 9.3% than the prior-year quarter.

Segment wise, quarterly net income in the regional banking segment declined 12.5% year over year to $111.7 million. Fixed income and non-strategic segments reported net income of $7.6 million each. The corporate segment, however, posted net loss of $23.4 million.

Revenues Decline, Costs Down

Total revenues for the first quarter came in at $435.6 million, slightly down on a year-over-year basis. However, the top-line figure surpassed the Zacks Consensus Estimate of $429.6 million.

Net interest income for the reported quarter dipped 2.2% year over year to $294.5 million. Net interest margin shrunk 12 basis points (bps) to 3.31%. However, non-interest income came in at $141 million, up 3.7% year over year.

Non-interest expenses slipped 5.5% year over year to $296.1 million.

Efficiency ratio came in at 67.99% compared with 71.67% witnessed in the year-ago quarter. It should be noted that a fall in the efficiency ratio indicates increase in profitability.

Total period-end loans, net of unearned income, came in at $28 billion, up 1.7% from the previous quarter. However, total period-end deposits were $32.5 billion, down nearly 1% from fourth-quarter 2018.

Credit Quality

Allowance for loan losses was down 1.2% year over year to $184.9 million. Furthermore, as a percentage of period-end loans on an annualized basis, allowance for loan losses was 0.66%, down 3 bps year over year.

Nonetheless, the quarter witnessed net charge-offs of $4.5 million compared with $1.4 million reported in the prior-year quarter. In addition, non-performing assets increased 20.2% year over year to $207.5 million. Also, during the quarter, the company recorded $9 million in provision for loan losses compared with a provision benefit of $1 million recorded in the year-ago quarter.

Capital Position

Tier 1 common equity ratio was 9.66%, up from 8.98% at the end of the year-earlier quarter. Additionally, total capital ratio was 11.82%, up from 11.25% in the prior-year quarter.

Our Viewpoint

Continued growth in loans will likely be conducive to First Horizon’s top-line performance. This apart, improvement in the efficiency ratio is also anticipated to support its profitability. Nevertheless, rising provision for loan losses remains a drag.

First Horizon National Corporation Price, Consensus and EPS Surprise

First Horizon National Corporation Price, Consensus and EPS Surprise
| First Horizon National 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

Washington Federal’s (WAFD - Free Report) second-quarter fiscal 2019 (ended Mar 31) earnings came in at 63 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. The figure also reflected year-over-year growth of 10.5%.

Shares of Commerce Bancshares, Inc. (CBSH - Free Report) lost 3.2%, following the release of first-quarter 2019 results. Earnings per share of 85 cents lagged the Zacks Consensus Estimate of 91 cents. Moreover, the figure compared unfavorably with the prior-year quarter’s earnings of 88 cents.

Hancock Whitney Corporation’s (HWC - Free Report) first-quarter 2019 operating earnings per share of $1 beat the Zacks Consensus Estimate of 98 cents. The reported figure also came in 11.1% higher than the year-ago tally.

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