It has been about a month since the last earnings report for First Horizon National (FHN). Shares have added about 2.4% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is First Horizon due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
First Horizon Q2 Earnings Beat Estimates on Higher NII & Fee Income
First Horizon 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 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.Â
Net income available to its common shareholders was $260 million, up 12% year over year.
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.
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.
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.
Capital Ratios Decline
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.
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.
2026 Outlook
Adjusted revenues, excluding deferred compensation, are expected to increase 3-7% from the 2025 baseline of $3.42 billion.
The company expects mid-single-digit balance-sheet growth, supported by commercial loan pipelines and continued relationship expansion.
Adjusted expenses, excluding deferred compensation, are projected to remain roughly flat from the 2025 baseline of $2.05 billion.
The net charge-off ratio is expected to be 0.15-0.25%, compared with 0.19% in 2025.
The effective tax rate is projected at 21-23%, although discrete items may cause quarterly variation.
The company continues to target a CET1 ratio of about 10.5%, with the level likely to vary based on loan growth and capital deployment.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, First Horizon has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, First Horizon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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